May 8 - Link to Fitch Ratings' Report: Credit Cards: Asset Quality Review 1Q12May 8 - Net charge-offs in the U.S. credit card sector could fall modestly in the second quarter of 2012 (2Q12), given current delinquency trends, according to Fitch Ratings. But Fitch expects loss rates to exit 2012 higher than where they started. Stable asset performance is expected to support existing ratings assigned to general purpose card issuers while providing a diversified source of earnings to larger bank players. Fitch believes credit card ABS ratings will remain stable given available credit enhancement, loss coverage multiples, and structural protections afforded investors. While the pace of improvement has moderated, credit card asset quality metrics continued to decline over the past two quarters, with net charge-off rates for the top seven general purpose card issuers falling to 4.02% in 1Q12, on average; down 237 bps year over year and down 18 bps from 4Q11. Issuer net charge-offs were 249 bps below their 2007 - 2011 average in 1Q12, while delinquencies of 30 days or more were 169 bps below their five-year average. Card segment profitability was strong across the sector, with the top seven issuers posting a return on average loans of 4.2% in 1Q12, on average, compared with 4.4% in 1Q11. Revenue generally stabilized for the larger banks, but provision expense was up 65.7% year over year, on average, given smaller reserve releases and modest portfolio growth. Fitch expects provisions to remain a headwind throughout 2012, as credit metrics begin their mean reversion. Still, Fitch believes credit metrics could stabilize at a rate lower than the historical average given changes in underwriting criteria, declines in subprime exposure, and a broader focus on card transactors over revolvers. Portfolio contraction at the larger banks moderated in 4Q11 and 1Q12, while other issuers recorded modest portfolio expansion. On a year-over-year basis, the top seven general purpose card portfolios contracted 1.33% in 4Q11 and 0.15% in 1Q12, on average, which Fitch believes signals a bottoming of portfolio balances. Fitch expects low single digit portfolio growth in 2012. The full report 'Credit Cards: Asset Quality Review 1Q12' is available at 'www.fitchratings.com.' Additional information is available at 'www.fitchratings.com'.