Credit Commentary

Mixed Credit losses trend for Dec’09

By Administrator on Monday, February 01 2010

In a sign that consumers were stressed during the holiday shopping season, Capital One Financial Corp. and Bank of America Corp. announced that they saw an increase in credit Card charge-offs for December. Along with Discover Financial Services, the three companies reported that delinquency rates, a gauge of future losses, fell for the last month of 2009.

The charge off rates rose at Capital One from 9.6% in November to 10.14% last month for its U.S. credit cards. But reversing the increasing trend, delinquency rates at the bank fell to 5.78% from 5.87% the month prior.

American Express continued its streak of reporting relatively healthier credit trends. The company saw both charge-offs and delinquencies fall. Net charge offs on a managed basis fell to 7.1% in December from 7.6% in November. While JP Morgan saw delinquencies rise to 4.94% in December versus 4.90% in November, but charge-offs fell to 7.11% in December versus 8.81% in November.

Bank of America, the nation's largest bank, saw the highest delinquency and default rates of the three companies that reported results. Charge off rates at the nation's largest bank increases to 13.53% from a flat 13% in November. The rates had declined at the bank for three consecutive months. In addition, delinquency rates fell to 7.44% from 7.69 in November.

Discover Financial saw improvement with an 8.68% charge off rate, down from the 8.98% in November, while delinquency rates dropped as well from 5.65% to 5.49%.