UPDATE 2-Capital One credit card defaults rise in September

Thu Oct 15, 2009 6:55am EDT

* US credit card charge-offs rise to 9.77 pct in September

* US credit card delinquencies go up to 5.38 pct in Sept (Updates with financial details, analyst comments)

NEW YORK Oct 15 (Reuters) - Capital One Financial Corp's (COF.N) U.S. credit-card defaults rose in September as more Americans lost their jobs, in another sign that consumers remain under stress.

In a regulatory filing on Thursday, Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards had risen to 9.77 percent in September from 9.32 percent in August.

Accounts at least 30 days delinquent -- an indicator of future loan losses -- increased to 5.38 percent from 5.09 percent.

JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc (C.N), American Express Co (AXP.N) and Discover Financial Services (DFS.N) plan to report the monthly performance of their credit card portfolios later on Thursday.

Credit card defaults usually track unemployment, which rose to a 26-year high of 9.8 percent in September. The jobless rate is expected to peak at more than 10 percent by year-end.

Considering the trend of unemployment and the increase in delinquencies, analysts have estimated credit card losses will keep rising in coming months.

Credit Suisse analyst Moshe Orenbuch believes loss rates will not improve for more than a year, he wrote in a note to clients on Wednesday night.

"Call us old-fashioned, but it seems that if significantly more people are out of work (and that number is climbing at an annual rate of more than 3 million) that the risk of higher credit losses is increasing," Orenbuch said.

Orenbuch said he expected credit card losses to peak in the fourth quarter and remain elevated in 2010.

For U.S. auto loans, Capital One's charge-off rate went up to 4.58 percent in September from 4.31 percent in August, and the delinquency rate inched up to 9.52 percent from 9.42 percent.

In international operations, including Canada and Britain, the charge-off rate rose to 9.24 percent in September from 8.60 percent in August, but the delinquency rate fell to 6.63 percent from 6.67 percent. (Reporting by Juan Lagorio; Editing by Lisa Von Ahn)

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