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Card Issuers' Delinquencies Down, Charge-Offs Up in February

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The U.S. credit card delinquency rates declined in February 2021 for major issuers amid the coronavirus-induced economic slowdown. However, the number of credit card loans that are charged off after consumers are delinquent on numerous payments and a bank determines that the loans won't get repaid increased.


Bank of America’s (BAC - Free Report) delinquencies declined to 1.50% in February from January’s 1.55%, while charge-off rate of 2.67% was up from 1.81%.

Also, JPMorgan’s (JPM - Free Report) delinquency rate was 0.97% compared with the prior month’s 0.99%. However, its rate of losses on credit card loans rose 14 basis points (bps) in February to 2.11%. Likewise, another major credit card issuer, Capital One’s (COF - Free Report) charge-off rate increased to 2.66% from 2.54% in January, while delinquency rate declined 4 bps to 2.45%.

Similarly, for Citigroup (C - Free Report) credit card charge-off rate increased 75 bps to 2.76% in the reported month, while its delinquency rate fell 7 bps from the prior month to 1.31%.

Further, Synchrony Financial’s (SYF - Free Report) adjusted charge-off rate rose to 4.00% in February from January’s 3.10%, while core delinquencies declined 10 bps to 3.10%. Moreover, Discover Financial’s (DFS - Free Report) delinquency rate decreased to 2.01% in the reported month from 2.08% in January, while its charge-off rate grew 58 bps to 3.15%.

On the other hand, American Express’ (AXP - Free Report) rate of delinquencies remained steady at 1.00% in February. Yet, rate of charge-offs of 1.40% was up 10 bps from the prior-month level.

Our Take

The new stimulus payments are on the way to bank accounts and economic recovery is likely to occur at a fast pace. Thus, the chances of a substantial rise in net charge-offs and delinquency rates are less in the near term. This will offer support to banks’ asset quality to a great extent this year.

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