The FINANCIAL — The U.S. economy has ended the year on a positive note and enters 2015 in the right direction, which will be a continued positive for U.S credit card ABS, according to the latest monthly index results from Fitch Ratings.
Despite a few seasonal bumps over the November collection period, most U.S. credit card ABS metrics remain at or near record levels. Factors driving performance include a continued decline in oil prices and increases in disposable income. Labor market movement also remains positive despite a small increase in initial jobless claims.
The U.S. Department of Labor reported last week that the advance figure for seasonally adjusted initial jobless claims was 298,000, an increase of 17,000 from the prior week’s revised numbers. The four-week moving average was 290,750, an increase of 250 from the previous week. In addition, the Bureau of Economic Analysis reported an increase in disposable income of $42.4 billion or 0.3 percent in November.
Fitch’s Prime Credit Card Chargeoff Index increased for the November collection period after declining for two consecutive months, now at 2.72%. The index has declined 9.63% year-over-year (YOY) and is now 76.4% below its historic high of 11.52% (reached in September 2009).
While chargeoffs increased, Fitch’s Prime Credit Card 60+ Day Delinquency Index remained unchanged at 1.09% in December. The delinquency index remains 14% lower YOY and 76% below its all-time high of 4.54% that was reached in January 2010, according to Fitch Ratings.
Consistent with seasonal trends, Fitch’s Prime Credit Card Monthly Payment Rate (MPR) Index decreased in December by 236 bps month-over-month (MOM) to 25.24%. This index is well above its historical average of 17.42%. Similarly, Fitch’s Prime Credit Card Gross Yield Index decreased by two bps MOM to 18.44%, yet the index is up 27 bps YOY.
While gross yield decreased, Fitch’s Three-Month Average Excess Spread Index increased seven bps MOM to 13.50. This index remains 4.09% above the levels observe one year ago.
Fitch’s Prime Credit Card Index was established in 1991 and tracks over $146.4 billion of prime credit card ABS backed by approximately $254.6 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.
The performance of Fitch’s retail credit card indices in December were very much in-line with the prime indices. Fitch’s Retail Credit Card Chargeoff Index also increased in December by 65 bps to 6.42%. Although this index is up by 11.27% MOM, it has declined nearly 52.1% from its all-time high of 13.41% in March 2010, according to Fitch Ratings.
Similar to the prime index, Fitch’s Retail Credit Card 60+ Day Delinquency index remained flat at 2.63%. The retail 60+ day delinquency index is now 3.66% lower on the year.
Fitch’s Retail MPR index decreased to 15.62% in December, a 36 bps decline MOM. During the same period, the Retail Credit Card Gross Yield Index increased 126 bps MOM to 28.11%. Fitch’s indexes for MPR and gross yield remain higher YOY by 0.90% and 1.03%, respectively.
Fitch’s Retail Credit Card Index tracks more than $18 billion of retail or private label credit card ABS backed by over $31 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A, Synchrony Financial (Formerly GE Capital Retail Bank), and Comenity Bank (formerly World Financial Network National Bank). More than 165 retailers are incorporated including Walmart, Sears, Home Depot, Federated, Lowes, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard’s, among others, according to Fitch Ratings.
Discussion about this post