Fitch’s performance index of prime ABS credit card late stage delinquencies ticked up slightly in October, but is hardly suggestive of a major trend reversal. Variation is to be expected month to month, and of course the modest growth in new account origination this year is bound to increase some delinquencies as accounts mature. In the meantime, charge-offs are at record lows. These ABS cards are issued primarily by major issuers including Bank of America, Citibank, Capital One, Chase, and Discover.
From Yahoo Finance:
Late stage delinquencies snapped a 12-month streak by rising two basis points (bps) to 1.71% in October. Throughout 2012 thus far, however, late payments have remained well below the 3% average of the prime index since inception. Early stage delinquencies, or receivables associated with accounts 30 days past due, remained relatively flat from the previous month at 2.21%. Fitch expects chargeoffs to remain relatively stable as delinquencies hover at these current levels.
Fitch’s Prime Credit Card Chargeoff Index for October posted its second month-over-month improvement, decreasing another 13 bps to 4.16%. The decline this month in cardholder defaults represents the lowest level since early 2007 and is down 25% year-over-year.
Good news continues for ABS retailer cards, most issued by Citibank, GE Money Bank and World Financial Network National Bank on behalf of retailers.
Fitch’s Retail Credit Card Chargeoff Index improved in October and decreased 26 bps to 6.57% while registering a 60-month low. The decline marks the third straight month of improvement and is now roughly 50% lower than its peak exhibited in mid-2010. Late stage delinquency metrics, however, backed off recent lows yet remained relatively stable from the previous month, with an increase of only three bps to 2.71%.
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