Last quarter's GDP contraction did little to stem the strong performance
of U.S. credit card ABS, according to the latest monthly index results
from Fitch Ratings.
Despite a few seasonal bumps over the April collection period, most U.S.
credit card ABS metrics remain at or near record levels. Delinquencies
plunged to new lows while excess spread reached record highs. All signs
indicate that the health of U.S. consumers is improving, despite the
contraction in GDP during the first quarter.
Last week's announcement regarding first quarter-2014 (1Q'14) GDP
indicated that the U.S. economy contracted. According to the Bureau of
Economic Analysis, GDP decreased at an annual rate of 1% in the first
three months of the year. However there were other indicators showing
the U.S. economy might bounce back in the second quarter.
According to the Conference Board, the Consumer Confidence Index
increased moderately for the month of May to 83.0 from 81.7. In
addition, Consumer Price Index increased 0.3 percent in April on a
seasonally adjusted basis according to the U.S. Department of Labor,
contributing to solid credit ABS performance. However, relatively flat
sales could be mildly negative. According to the Commerce Department,
retail sales rose just 0.1% in April, after notching a 1.5% gain in
March. All indications still point to U.S. credit card ABS performance
staying in record territory for the near term.
After hitting a record low in April, Fitch's Prime Credit Card 60+ Day
Delinquency Index decreased another two basis points (bps) to 1.15% in
May. The decline marks a milestone for the index reaching the lowest
level since its launch in 1991. The index has declined 22%
year-over-year (YOY) and now stands 75% below its peak level reached at
the end of 2009.
While the delinquency index improved, Fitch's Prime Credit Card
Chargeoff Index increased seven bps to 3.11% in May. However, the index
remains down nearly 21% YOY. Notably, the Fitch Prime Chargeoff Index is
now 73% below its historic high of 11.52% reached in September 2009.
Consistent with seasonal trends, Fitch's Prime Credit Card Monthly
Payment Rate Index declined to 26.23% in May. This index is now 12%
higher YOY and well above its historical average of 17.18%. Similarly,
Fitch's Prime Credit Card Gross Yield Index decreased 87 bps
month-over-month (MOM) to reach 18.25% in May. Prime Gross Yield has
declined every May since Fitch created its credit card ABS index back in
1991.
Fitch's Prime Credit Card Three-Month Average Excess Spread Index also
set a new record during in May increasing 24 bps MOM to a new high of
13.27%.
Fitch's Prime Credit Card Index was established in 1991 and tracks over
$129.7 billion of prime credit card ABS backed by approximately $243.6
billion of principal receivables. The index is primarily comprised of
general purpose portfolios originated by institutions such as Bank of
America, Citibank, Chase, Capital One, Discover, etc.
Fitch's retail credit card indices registered positive momentum in
delinquencies and MPR in May, though gross yield and chargeoffs faired
less favorably. However, Fitch's Retail Credit Card Three-month Average
Excess Spread Index increased 12 bps MOM to 18.60%, an all-time high for
the index since its inception in 2004.
Fitch's Retail Credit Card 60+ Day Delinquency Index decreased by two
bps MOM to 2.44%in May. During the same period however, Fitch's Retail
Credit Card Chargeoff Index increased by 30 bps to 6.95%, increasing
4.51% MOM. However, the Retail Chargeoff index remains 50% lower than
its peak of 13.41% reached in March 2010.
Fitch's Retail Credit Card Gross Yield Index decreased by 87 bps to
27.52% from the previous month, a 3.06% decrease. However, Fitch's
Retail Credit Card MPR Index increased by 57 bps MOM to 15.91%.
Fitch's Retail Credit Card Indices track more than $20 billion of retail
or private label credit card ABS backed by over $31.5 billion of
principal receivables. The index is primarily comprised of private label
portfolios originated and serviced by Citibank (South Dakota) N.A., GE
Capital Retail Bank and Comenity Bank (Formerly World Financial Network
National Bank). More than 165 retailers are incorporated including
Wall-Mart, Sears, Home Depot, Federated, Lowes, J.C. Penney, Limited
Brands, Best Buy, Lane Bryant and Dillard's, among others.
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20140602005912r1&sid=cmtx6&distro=nx
SOURCE: Fitch Ratings
 | Fitch Ratings Jenny Ovalle Associate Director +1-212-908-0849 Fitch Ratings, Inc., One State Street Plaza, New York, NY 10004 or Michael Dean Managing Director +1-212-908-0556 or Media Relations Sandro Scenga, New York, +1-212-908-0278 sandro.scenga@fitchratings.com |
No comments:
Post a Comment