(The following statement was released by the rating agency)
NEW YORK, May 12 (Fitch) US credit card losses have likely
bottomed and are
expected to move modestly higher by the end of 2014, according
to Fitch Ratings.
Fitch's review of 1Q14 card performance measures shows modest
rises in net
chargeoffs (NCOs) and leveling card delinquencies, as well as
some easing of
lending standards and savings rates. These trends are signals
that card NCOs,
steadily dropping since the financial crisis, have likely run
their course for
NCOs at each of the top six US general purpose card issuers
climbed between 1Q14
and 4Q13, rising 13 bps on a weighted basis to 2.85%.
effects explain a portion of the first quarter rise, yet the
jump was notably
higher than the rise seen one year ago.
The increases in NCOs were highest at American Express, Discover
Bancorp. These firms also saw steadier, higher growth rates in
portfolio balances, which may reflect some easing of lending
significant tightening in the midst of the crisis, adding to our
that card losses are likely to exit 2014 higher than where they
Late stage (90+ day) delinquencies, after rising from multi-year
lows in 4Q13,
held relatively flat in 1Q14, amounting to 0.93% on a weighted
Personal savings rates amounting to 3.8% of disposable personal
income in March
2014 were down from 4.2% in February. These levels remain below
the 5.5% monthly
average seen between 2009-2013, but remain better than
according to the US Bureau of Economic Analysis.
US weekly unemployment claims, which historically track Fitch's
ABS Index of
Prime Chargeoffs, have risen to an average of 325,000 over the
past four weeks
ending May 3. If upticks in claims continue meaningfully, our
increases in card losses will grow.
For a detailed analysis of card issuers' first quarter 2014
performance, see the
special report "U.S. Credit Cards: Asset Quality Review 1Q14,"
Meghan Neenan, CFA
Matthew Noll, CFA
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch
Wire credit market
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hyperlinks to companies
and current ratings, can be accessed at www.fitchratings.com.
expressed are those of Fitch Ratings.
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