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Credit card metrics for February were largely consistent with trends seen in recent months, continuing to normalize at a gradual pace, with the exception of Bread Financial (New York Stock Exchange: BFH).
But delinquency and delinquency trends remain generally below pre-pandemic levels, Baird noted. “Given the widespread sell-off in the financial sector, combined with healthy credit quality, we would continue to take advantage of weakness in Capital One Financial (NYSE:COF) and American Express (New York Stock Exchange:AXP),” analyst David George said.
Jefferies noted that accounts receivable were down 1% per month, driven by seasonal factors typically seen at this time of year. “The current macro/inflationary environment continues to affect the non-prime cohorts more acutely, while the prime cohorts look stable,” analyst John Hecht said.
Wolfe Research maintained its underweight stance in card issuers Capital One (COF), Discover Financial (New York Stock Exchange: DFS), Financial Synchronization (New York Stock Exchange:SYF) and Bread Financial (BFH) after this month’s credit data.
Please note that Bread Financial (BFH) is the only credit card issuer with delinquency rates and net charge-offs that are higher than the levels it experienced in the February 2020 pre-pandemic era, as seen in the table below. .
“The normalization of the delinquency rate continues to outpace seasonality,” said analyst Bill Carcache. “We expect delinquency rate formations to continue to rise in the coming months before accelerating later in the year, as the effects of last year’s rate hikes fuel a further slowdown and lead to an increase in initial claims.” .
Meanwhile, KBW remains bullish on card issuers in general, as “these companies warrant superior valuation relative to the regional banking space.”
| 2023 | 2022 | 2020 | ||||||
| Company | Heart | Guy | February | January | December | 3 month average | February | change in bps |
| capital one | COF | delinquency | 3.72% | 3.65% | 3.43% | 3.60% | 3.88% | -sixteen |
| cancellation | 4.16% | 3.81% | 3.57% | 3.85% | 4.68% | -52 | ||
| amexpress | AXP | delinquency | 1.10% | 1.00% | 1.00% | 1.03% | 1.60% | -fifty |
| cancellation | 1.40% | 1.50% | 1.20% | 1.37% | 2.60% | -120 | ||
| JPMorgan | New York Stock Exchange: JPM | delinquency | 0.88% | 0.83% | 0.76% | 0.82% | 1.14% | -26 |
| cancellation | 1.33% | 1.17% | 1.24% | 1.25% | 2.20% | -87 | ||
| Synchrony | FIS | delinquency | 3.90% | 3.80% | 3.70% | 3.80% | 4.50% | -60 |
| adjusted cancellation | 4.70% | 4.30% | 3.40% | 4.13% | 5.30% | -60 | ||
| Discover | SFD | delinquency | 2.74% | 2.67% | 2.53% | 2.65% | 2.64% | -10 |
| cancellation | 3.40% | 2.81% | 2.54% | 2.92% | 3.84% | -44 | ||
| financial bread | BFH | delinquency | 6.00% | 5.80% | 5.50% | 5.77% | 5.90% | 10 |
| cancellation | 7.80% | 6.70% | 6.70% | 7.07% | 6.80% | 100 | ||
| Citigroup | New York Stock Exchange:C | delinquency | 1.12% | 1.04% | 1.01% | 1.06% | 1.58% | -46 |
| cancellation | 1.55% | 1.50% | 1.34% | 1.46% | 2.64% | -109 | ||
| Bank of America | New York Stock Exchange: BAC | delinquency | 1.14% | 1.09% | 1.03% | 1.09% | 1.58% | -44 |
| cancellation | 1.61% | 1.50% | 1.43% | 1.51% | 2.55% | -94 | ||
| average crime | 2.58% | 2.49% | 2.35% | 2.47% | 2.85% | |||
| average cancellation | 3.24% | 2.91% | 2.68% | 2.94% | 3.83% | |||
SA contributor Harrison Schwarz takes a cautious view of Capital One (COF) on the potential for defaults to skyrocket in 2023.
