Fitch: U.S. Credit Card ABS to End 2015 on Positive Note
U.S. credit card ABS performance remains robust, and enters 2016 moving in a positive direction, according to the latest monthly index results from Fitch Ratings.
As the historically high, year-long performance continues, the 25-basis points (bps) increase in interest rates imposed in December by the Federal Open Market Committee is expected to have minimal impact on credit card ABS.
Other macroeconomic indicators continue to hold firm as 2016 approaches. As reported by the Bureau of Labor Statistics, four-week average jobless claims continue at year-over-years lows, registering at 272,500, with the unemployment rate unchanged at 5%. And, while November retails sales reported by the Census Bureau were a sluggish 0.2%, it represented the fastest growth since July. Retail sales excluding autos rose 0.5% from the prior month.
Prime credit card metrics held steady for the most part this month, continuing to build on prior year's performance. Fitch's Prime Credit Card Gross Yield Index improved 18 bps to 19.10% this month and is 3.58% higher YOY. Fitch's Prime Credit Card Three-Month Excess Spread Index increased again this month to 14%, and is just below the historical high of 14.1% reached in October 2015. The index is 4.82% higher YOY.
Fitch's Prime Credit Card Chargeoff Index ticked up slightly to 2.59%, but remains 4.78% lower YOY. Current performance is approximately 78% lower than its peak of 11.52% reached in September 2009. 60+ Day Delinquencies stayed relatively flat, increasing two bps to 1.05%. The index is 1.94% lower than the prior year, and is well below the historical high of 4.54% reached in December 2009. Fitch's Prime Credit Card Monthly Payment Rate (MPR) Index decreased to 26.68% this month, in line with seasonal trends.
Fitch's Prime Credit Card Index was established in 1991 and tracks approximately $144.7 billion of prime credit card ABS backed by approximately $236.3 billion of principal receivables. The index is primarily composed of general purpose portfolios originated by institutions such as Bank of America, Citibank, Chase, Capital One, Discover, etc.
Fitch's Retail Credit Card MPR Index improved for the second month in a row to 16.12%, 3.20% higher YOY, matching its second highest value in 2015. Fitch's Retail Credit Card Chargeoff Index held steady at 6.46%, with performance at 51.8% lower than its all-time high of 13.41% from March 2010. Fitch's Retail Credit Card Gross Yield Index also improved, to 28.68% for the month of December.
Fitch's Retail Credit Card Three-Month Excess Spread Index decreased to 19.11% after reaching a historical high for the past three months but remains 9.5% higher YOY. Fitch's Retail Credit Card 60+ Day Delinquency Index ticked up to 2.54% for the month of December.
Fitch's Retail Credit Card Index was established in 2004 and tracks approximately $19 billion of retail or private label credit card ABS backed by approximately $29.5 billion of principal receivables. The index is primarily composed of private label portfolios originated and serviced by Citibank (South Dakota) N.A, Synchrony Financial (Formerly GE Capital Retail Bank), and Comenity Bank (formerly World Financial Network National Bank). More than 165 retailers are incorporated including Walmart, Sears, Home Depot, Federated, Lowes, J.C. Penney, L Brands, Bon Ton, and Dillard's, among others.
Additional information is available at 'www.fitchratings.com'.
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
Herman C. Poon
Elizabeth Fogerty, +1-212-908-0526