Most U.S. credit card companies reported charge-offs rose in November after two months of declines in a sign that consumers remain under stress, sending shares down industrywide.
In a regulatory filing on Tuesday, JPMorgan Chase & Co, the largest U.S. issuer of Visa-brand credit cards, said charge-offs — loans the company does not expect to be repaid — rose to 8.81 percent in November from 8.02 percent in October.
It was the largest increase among the biggest credit card issuers, but not the only one.
Capital One Financial Corp said its charge-off rate rose to 9.60 percent from 9.04 percent, and Discover Financial Services said its rate rose to 8.98 percent from 8.54 percent.
"American consumers are still hurting, and especially coming into the Christmas season," said Ken Crawford, senior portfolio manager at Argent Capital Management.
Bank of America Corp, the largest U.S. bank, said its charge-off rate fell for third straight month — to 13.00 percent in November from 13.22 percent in October. However, it is still the credit card issuer with the highest default and delinquency rates.
Credit card charge-offs and delinquencies usually track unemployment, which inched down in November to 10.0 percent from a 26-1/2-year high of 10.2 percent in October.
Still, 11,000 people lost their jobs last month, and analysts expect unemployment to remain high through 2010.
As card losses rose to record highs in recent months, lenders closed millions of accounts, trimmed credit limits and slashed rewards programs. The companies are also raising fees and interest rates ahead of a new consumer-protection law.
JPMorgan shares were down 1.48 percent to $41.15, Bank of America declined 1.98 percent at $15.32, Capital One fell 1.66 percent at $40.37, and Discover retreated 1.09 percent at $16.31.
JPMorgan and Discover said credit card delinquencies — payments more than 30 days late, an indicator of future defaults — declined after several monthly increases, reinforcing the idea that charge-offs will peak early next year.
"What we have seen consistently over the last few months is that the early delinquency buckets have been pretty stable for the most part, or down a little bit, and that is a good sign for future credit performance," said Michael Taiano, an analyst at Sandler O'Neill.
Last week, Capital One Chief Executive Officer Richard Fairbank forecast the bank's charge-offs would peak in the first quarter of 2010.
JPMorgan said late payments fell to 4.90 percent in November from 4.95 percent in October, while Discover showed a small decline in its delinquency rate, to 5.65 percent from 5.72 percent.
Bank of America said its late payment rate went up to 7.69 percent from 7.59 percent, and Capital One, the third-largest U.S. issuer of Visa-brand credit cards, said its rate rose to 5.87 percent from 5.72 percent.
American Express Co, the biggest U.S. credit card company by purchases volume, and Citigroup Inc, the largest issuer of MasterCard-brand credit cards, are due to report the monthly performance of their portfolios later Tuesday.
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