NEW YORK (Reuters) - Fewer Americans fell behind on credit card payments in September, but the pace of improvement slowed almost to a standstill, accelerating fears that banks will not recover from their consumer loan losses for years.
Credit card bank stocks declined on Friday, with shares of Capital One Financial Corp posting the worst decline among banks. Shares of other major U.S. banks also fell on Friday as investor expressed concern over a growing mortgage foreclosure crisis.
Credit card delinquencies, which indicate that consumers are late paying their bills, are an early sign of future losses, or charge-offs.
Banks file monthly credit card reports with the U.S. Securities and Exchange Commission.
Delinquencies in September were flat or slightly lower at major U.S. card lenders, the filings showed, indicating losses were unlikely to surge again soon. But the rate of decline was slower than in previous months this year.
“There’s been a bit of a flat-lining in the last couple of months,” said Michael Taiano, an analyst with Sandler O’Neill.
Overall credit card loss rates remained high at most lenders.
JPMorgan Chase Chief Executive Officer Jamie Dimon told investors and analysts on Wednesday that he did not expect the bank’s credit card portfolio to “bottom out” until the third quarter of 2011.
The company and its main competitors are also struggling to grow their credit card businesses because consumers are reluctant to take on more debt.
Bank of America Corp and Citigroup Inc reported the largest declines in overall credit card losses on Friday, but both continued to report some of the highest charge-offs among major U.S. credit card lenders.
Delinquency rates at both banks remained essentially flat, signaling their losses may not decline much in coming months.
Bank of America’s charge-offs fell to 9.99 percent in September from 11.73 percent in August. But its delinquencies edged up to 5.71 percent from 5.68 percent, according to its filing.
Citigroup’s charge-offs fell to 8.99 percent in September from 11.18 percent in August, but its delinquencies declined to 4.93 percent from 4.95 percent.
JPMorgan Chase’s credit card delinquencies fell to 3.82 percent in September from 3.89 percent in August. Its charge-offs declined to 7.78 percent from 8.18 percent.
American Express said its delinquencies inched up to 2.5 percent in September from 2.4 percent in August. But the credit card lender and processing network continued to report the lowest monthly delinquencies and losses of the major U.S. lenders, and its charge-offs dropped to 4.7 percent from 5.5 percent in August.
Discover Financial Services said delinquencies ticked down to 4.41 percent in September from 4.47 percent in August. Charge-offs also fell to 7.15 percent, their lowest level this year.
Discover, like American Express Co, lends directly to consumers and also competes with Visa Inc and MasterCard Inc to process credit card transactions for banks.
Capital One’s delinquencies were 4.53 percent in September from 4.56 percent in August, while the McLean, Virginia-based bank’s credit card losses rose to 8.38 percent from 8.18 percent.
Capital One shares closed down 7.6 percent at $36.86; Bank of America shares closed down 4.9 percent at $11.98; JPMorgan shares closed down 4.05 percent at $37.15; Citigroup shares closed down 2.7 percent at $3.95; Discover shares closed down 3.17 percent at $17.10; and American Express shares closed down 0.88 percent at $39.09.
Reporting by Maria Aspan; Editing by Lisa Von Ahn, Dave Zimmerman
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