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WRAPUP 2-U.S. Card Delinquencies Fall, but Recovery Elusive

Friday, 15 Oct 2010 02:22 PM

* Delinquencies fall slightly at U.S. card lenders

* But pace of credit improvement slows

* Bank shares slump; Capital One down almost 6 pct

* JPMorgan fears card "bottom" still a year away

(Adds American Express, background on foreclosures; updates share price)

By Maria Aspan

NEW YORK (Reuters) - Fewer Americans fell behind on their credit card payments in September, but the pace of improvement slowed again, accelerating fears that banks will not recover from their consumer loan losses for years.

Credit card bank stocks slumped on Friday, with shares of Capital One Financial Corp posting the worst decline among banks. Shares of other major U.S. banks also fell on Friday, amid investor fears of a growing mortgage foreclosure crisis.

Credit card delinquencies, which indicate that consumers are late paying their bills, are an early sign of future losses, or charge-offs.

Delinquencies edged down at most major U.S. lenders in this sector, indicating that losses are unlikely to surge again soon. But the rate of decline at most lenders was slower than it had been in previous months this year.

Overall credit card loss rates remained high at most lenders and look set to stay that way for some time.

JPMorgan Chase Chief Executive Officer Jamie Dimon told investors and analysts on Wednesday that he did not expect the bank's credit card portfolio to "bottom out" until the third quarter of 2011.

The company and its main rivals are also struggling to increase their credit card businesses, as consumers are reluctant to take on new debt while the economy is still shaky.

The New York-based bank's credit card delinquencies fell to 3.82 percent in September from 3.89 percent in August, according to a regulatory filing Friday. Its charge-offs declined to 7.78 percent from 8.18 percent.

American Express said its delinquencies inched back up to 2.5 percent in September, from 2.4 percent in August. But the credit card lender and processing network continued to report the lowest monthly delinquencies and losses of the major U.S. lenders, and its charge-offs dropped to 4.7 percent from 5.5 percent in August.

Discover Financial Services said delinquencies ticked down to 4.41 percent in September from 4.47 percent in August. Charge-offs also fell to 7.15 percent, their lowest level this year.

Discover, like American Express Co, lends directly to consumers and also competes with Visa Inc and MasterCard Inc to process credit card transactions for banks.

Capital One's delinquencies were about flat at 4.53 percent in September from 4.56 percent in August, while the McLean, Virginia-based bank's credit card losses rose to 8.38 percent from 8.18 percent.

Bank of America Corp and Citigroup Inc are also due to report their monthly credit card portfolio performances later Friday.

Capital One shares were trading down 5.9 percent at $37.53 on Friday afternoon. Other decliners were Bank of America, down 4.7 percent; JPMorgan, down 3.3 percent; Citigroup, 2.7 percent; Discover, 2.3 percent; and American Express, 0.7 percent. (Reporting by Maria Aspan; Editing by Lisa Von Ahn, Dave Zimmerman)

© 2017 Thomson/Reuters. All rights reserved.

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* Delinquencies fall slightly at U.S. card lenders * But pace of credit improvement slows * Bank shares slump; Capital One down almost 6 pct * JPMorgan fears card "bottom" still a year away (Adds American Express, background on foreclosures; updates share price) By Maria...
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