Saturday, January 16, 2010

Credit-Card Trends Mixed

By APARAJITA SAHA-BUBNA

Delinquency rates, a gauge of future losses, slowed down for most credit-card issuers in December, but losses stemming from souring credit-card loans remain elevated.

Capital One Financial Corp. said charge-offs, or credit-card loans on which the lender doesn't expect to collect, increased to an annualized rate of 10.1% in December from 9.6% in November in its U.S. credit-card business.

But reversing a streak of increases, borrowers at least a month behind on credit-card payments fell to 5.78% last month from 5.87% in November.

Discover Financial Services said charge-offs in December totaled 8.68% of credit-card loans that have been packaged into bonds, down from 8.98% in November. A Discover spokeswoman declined to comment.

American Express Co. continued its streak of reporting relatively healthier credit trends. The company said U.S. borrowers at least a month behind on card payments declined to 3.7% in December from 3.9% in November.

In addition, AmEx wrote off 7.1% of its card loans last month, compared with 7.6% in November. AmEx officials declined to comment.

Bank of America Corp. reported a write-off rate of 13.5%, up from 13% in November, reversing a three-month trend of declines. A Bank of America spokesman declined to comment.

Chase, a unit of J.P. Morgan Chase & Co., said it wrote off 7.1% of credit-card loans last month, down from 8.8% in November.

Chief Financial Officer Mike Cavanagh said the recent improvement in credit-card losses mightn't continue as the U.S. economy continues to claw its way out of the financial crisis.

Mr. Cavanagh, speaking to the media after the bank reported fourth-quarter earnings, expects a $1 billion loss for credit cards in the first and second quarters.

No comments: