Market Overview

Fitch: U.S. Credit Card Chargeoffs Rebound, Fall to New Record

Share:
NEW YORK--(BUSINESS WIRE)--

U.S. credit card ABS bounced back this month with some metrics reaching new records, according to the latest monthly index results from Fitch Ratings.

After rising the past two months, Fitch's Prime Credit Card Chargeoff Index fell to a new record low of 2.43%. The Index is 2.3% lower year-over-year and nearly 45% lower than the index high from September 2009. Fitch's Prime Monthly Payment Rate (MPR) index improved for the second month in a row, rising to 29.69% its third highest value. Fitch's Prime Credit Card 60+ Delinquency Index continued its historic streak, increasing to 0.98% from 0.96% but remaining below 1% for a record sixth month. The delinquency index is steady YOY and well below the historical high of 4.54% reached in December 2009.

Third-quarter GDP rose 2.9%, up from 1.4% for second-quarter 2016, the strongest increase since third-quarter 2014. The labor market continues to track near record lows, with four-week average jobless claims at 253,000 for the week of Oct. 29, which is 3,000 lower than the month of September according to the Bureau of Labor Statistics. The strong labor market bodes well for U.S. Credit Card ABS performance heading into the fourth quarter of 2016.

Fitch's Prime Credit Card Gross Yield Index remained steady month-over-month increasing three basis-points (bps) to 19.03%. Fitch's Prime Credit Card Three-Month Excess Spread Index increased to 13.94%.

Fitch's Prime Credit Card Index was established in 1991 and tracks approximately $145.9 billion of prime credit card ABS backed by over $221.7 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.

Retail credit card metrics retreated this month, as chargeoff and 60+ delinquencies rose and gross yield fell. Fitch's Retail Credit Card Chargeoff Index increased for the second month in a row to 6.34%; the index is 6.73% higher YOY. Fitch's Retail 60+ Day Delinquency Index rose for the second month in a row to 2.52%. The index stands at its highest value since February 2015. Fitch's Retail Credit Card MPR Index increased to 15.83% for the month of August. The index is 2.46% higher YOY. Fitch's Retail Credit Card Gross Yield Index fell to 29.39%. Fitch's Three-Month Average Excess Spread Index improved for the second month in a row to 19.33%. The index now stands at its third highest value historically. Fitch's Retail Credit Card MPR Index increased this month to 29.36%. The index is 4.13% higher YOY.

Fitch's Retail Credit Card Index was established in 2004 and tracks approximately $18.8 billion of retail or private label credit card ABS backed by over $27.1 billion of principal receivables. The index is primarily composed of private label portfolios originated and serviced by Citibank 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'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

Fitch Ratings
Stephanie Lobaccaro
Analyst
+1-212-908-0769
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Herman C. Poon
Senior Director
+1-212-908-0847
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

View Comments and Join the Discussion!
 

Partner Center