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Credit card issuers' average delinquency and net charge-off rates continued to rise in January compared to December, lifting credit card metrics even higher than the pre-pandemic level four years ago, according to data compiled by Searching. Alpha.
The average delinquency rate increased to 3.24% in January from 3.01% in December, while remaining above the 2.90% level of the pre-pandemic month of January 2020. The average charge-off rate of 4.21 % jumped from 4.05% in December and was above the 3.71% level four years ago.
Meanwhile, credit card lending decreased from the previous month, with a total of $495.4 billion in accounts receivable for the eight companies tracked falling 1.6% month-over-month, but increasing 9.9% year-over-year . This is in line with seasonal demand, Jefferies analyst John Hecht said in a recent note. “Issuers have tightened credit, given the current macroeconomic situation, and should expect much weaker credit growth in 2024.”
Citi analyst Aren Cyganovich said: “Year-over-year loan growth has slowed further from high levels as issuers are tightening credit and face tougher comparisons following strong growth over the past year.”
However, consumers' financial situation appears to remain relatively strong, with average payment rates still above pre-pandemic levels, even as they fell 0.6% year-on-year, it noted.
Both American Express (New York Stock Exchange: AXP) and Capital One Financial (New York Stock Exchange:COF) experienced monthly improvements in net charge-off rates, as both had unusual items that increased their December net charge-offs, Cyganovich said.
“Overall, credit is moving in line with our expectations, although we expected to see a further slowdown in year-on-year delinquency rates, which improved for COF but remained stable or slightly worse for the others,” he summarized.
Jefferies' Hecht noted that seasonality is becoming more prevalent as the economy moves beyond the pandemic. However, the year-over-year percentage change in delinquencies increased 3 basis points compared to the previous month, but remained “well below” the October/November peak percentage change.
“We believe that the focus of the coming months will be on a decreasing trend in year-on-year delinquencies so that the maximum year-on-year percentage change in net charge-offs manifests in the mid-24, a factor that many are planning for at this juncture,” he wrote in a note. to his clients.
|
2024 |
2023 |
Change in bp, January 2023 to January 2020 |
|||||||
| Company | Heart | Guy | Jan. | Dec. | Nov. | Jan. | 3 month average | January 2020 | |
| capital one | COF | delinquency | 4.78% | 4.61% | 4.55% | 3.65% | 4.65% | 4.10% | 68 |
| cancellation | 5.71% | 5.78% | 5.19% | 3.81% | 5.56% | 4.31% | 140 | ||
| American Express | AXP | delinquency | 1.50% | 1.40% | 1.40% | 1.00% | 1.43% | 1.60% | -10 |
| cancellation | 2.10% | 2.50% | 1.70% | 1.50% | 2.10% | 2.30% | -twenty | ||
| JPMorgan | New York Stock Exchange: JPM | delinquency | 1.07% | 1.00% | 0.99% | 0.83% | 1.02% | 1.14% | -7 |
| cancellation | 1.72% | 1.69% | 1.75% | 1.17% | 1.72% | 2.19% | -47 | ||
| Synchrony | New York Stock Exchange:SYF | delinquency | 4.90% | 4.70% | 4.70% | 3.80% | 4.77% | 4.50% | 40 |
| adjusted cancellation | 6.00% | 5.60% | 5.60% | 4.30% | 5.73% | 5.20% | 80 | ||
| Discover | New York Stock Exchange: DFS | delinquency | 4.02% | 3.87% | 3.76% | 2.67% | 3.88% | 2.65% | 137 |
| cancellation | 5.23% | 4.90% | 4.71% | 2.81% | 4.95% | 3.45% | 178 | ||
| financial bread | New York Stock Exchange: BFH | delinquency | 6.80% | 6.50% | 6.50% | 5.80% | 6.60% | 6.00% | 80 |
| cancellation | 8.00% | 8.20% | 7.90% | 6.70% | 8.03% | 7.20% | 80 | ||
| citi group | New York Stock Exchange:C | delinquency | 1.51% | 1.45% | 1.47% | 1.04% | 1.48% | 1.58% | -7 |
| cancellation | 2.65% | 2.34% | 2.21% | 1.50% | 2.40% | 2.49% | sixteen | ||
| Bank of America | New York Stock Exchange: BAC | delinquency | 1.35% | 1.42% | 1.41% | 1.09% | 1.39% | 1.61% | -26 |
| cancellation | 2.23% | 2.27% | 2.24% | 1.50% | 2.25% | 2.54% | -31 | ||
| Average crime | 3.24% | 3.01% | 3.00% | 2.49% | 3.09% | 2.90% | 3. 4 | ||
| Average cancellation | 4.21% | 4.05% | 3.32% | 2.91% | 3.86% | 3.71% | 49 | ||
