BA says no evidence global IT outage caused by cyber attack
LONDON, May 27 British Airways said on Saturday there was no evidence that a global breakdown of its IT systems had been caused by a cyber attack.
* American Express default rates jumps to 10.10 percent
* Bank of America charge-off rate soars to 10.47 percent
* Citi credit card default rate rises to 10.21 percent
* Banks' shares fall as much as 4 percent (Updates with analyst comments, American Express data)
By Juan Lagorio
NEW YORK, May 15 U.S. credit card defaults surged to record highs in April, with American Express, Citigroup, Bank of America and Wells Fargo posting double digit loss rates, as unemployment climbed to its highest level in 26 years.
Credit card defaults often dip in April as consumers receive tax refunds, so the roughly 10 percent rates reported by most major credit card lenders were disheartening, analysts said, cooling hopes of an early recovery in the industry -- or the U.S. economy.
"The idea that we were going to rebound was put to rest for a little bit. And it will only get weaker as the year goes on," said Scott Valentin, an analyst at FBR.
If credit card losses across the industry surpass 10 percent this year, as some analysts and bank executives expect, loan losses could top $70 billion.
"These forecasts could go higher depending on further deterioration in employment and delinquency trends over the next several months, Moshe Orenbuch, an analyst at Credit Suisse, said in a research note.
Credit card lenders are trying to protect themselves by tightening credit limits, raising standards and closing accounts. They have also been slashing rewards, increasing interest rates and boosting fees to cushion against further losses.
American Express Co (AXP.N) took the unusual step earlier this year of giving some card holders $300 to pay off their balances and close their accounts.
American Express, which accounts for nearly a quarter of credit and charge card sales volume in the United States, said its net charge-off rate -- the percentage of debt it does not expect to be repaid -- jumped to 10.1 percent in April from 8.80 percent in March, on an annualized basis.
In addition, Citigroup Inc (C.N) -- a big issuer of MasterCard cards -- reported its annualized charge-off rate rose to 10.21 percent in April from 9.66 percent in March, and Bank of America Corp (BAC.N) -- the largest U.S. bank -- said its default rate soared to 10.47 percent from 9.31 percent.
Wells Fargo & Co (WFC.N) -- the fourth-largest U.S. bank -- said its credit card default rate increased to 10.03 percent from 9.68 percent.
"U.S. card credit quality continues to struggle," John Williams, an analyst at Macquarie Research, said in a note to clients.
Bank of America's shares fell 5.7 percent to close at $10.67 on the New York Stock Exchange, while American Express stock declined 2 percent to $24.23. Citigroup shares fell 2 percent to $3.48. Wells Fargo's stock dropped 3.2 percent to $24.87.
CAPITAL ONE BRINGS POSITIVE SURPRISE
Not all banks performed as badly. JPMorgan Chase & Co, (JPM.N) a big issuer of Visa cards, reported its charge-off rate rose to 8.07 percent in April from 7.13 percent in the previous month, while Discover said its default rate rose to 8.26 percent from 7.39 percent.
Capital One Financial Corp (COF.N) reported lower default rates in its U.S. business and beat analyst expectations, but it was helped by moving the goal posts: it waits longer to declare the debts of bankrupt customers uncollectable.
Excluding the benefit of that change, Capital One's credit card defaults were in line with March data. "We expect a 'catch-up' in May, which will likely cause a large spike in the May net charge-off rate" of Capital One, Valentin said.
Capital One also surprised investors last week after U.S. regulators decided the bank is sufficiently capitalized to face a deeper recession. (Reporting by Juan Lagorio; Editing by Steve Orlofsky, Gary Hill)
LONDON, May 27 British Airways said it had cancelled all flights from London's Heathrow and Gatwick airports scheduled before 1700 GMT on Saturday due to a global computer outage.
LONDON, May 27 British Airways flights in Britain were being delayed and passengers were suffering long waits at airports on Saturday because of a global system outage, the airline said.