Credit Commentary

Consumer Confidence exceeds expectations, other data mixed

By Zarana on Thursday, May 27 2010

The US reported positive consumer confidence data, and decline in house prices this morning. It seems Americans are feeling better about their job prospects, pushing consumer confidence higher in May. But signs that shoppers are slowing their spending as stocks fall could pose a roadblock on the path to recovery. CONSUMER CONFIDENCE EXCEEDS FORECAS...

Foreclosures ease in February, but risk remains

By Zarana on Thursday, March 11 2010

U.S. mortgage foreclosure filings dropped for a second straight month in February, and notched the smallest annual increase in four years as housing-rescue efforts contained activity. If foreclosures keep dropping further, it will be one of the strongest signals yet the market is on the path to recovery. However, this ease in foreclosure filing doe...

Consumer Credit rises for first time in 12 month, but Credit Card Borrowing Falls

By Administrator on Monday, March 08 2010

Total U.S. consumer credit rose $4.96 billion in January, its first rise in a year and the largest for any month since mid-2008. The unexpected monthly gain in outstanding combined consumer credit was centered in nonrevolving credit, which includes items like loans to buy new cars and boats. The last time that overall consumer credit rose more str...

New Home Sales Plunge to Record Low in Jan'10

By Zarana on Thursday, March 04 2010

Sales of new homes unexpectedly plunged to a record low in January as the weak economy and a glut of foreclosed homes continue to weigh on the market. The seasonally adjusted annual rate of new home sales declined to 11.2% to 309,000 last month, compared with a revised rate of 348,000 in Dec'09. That's a decline 6.1% from January 2009. It was the l...

U.S. consumer confidence plunges in February

By Zarana on Wednesday, February 24 2010

Consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy which raise concerns about the outlook for consumer spending. Very few consumers are anticipating an improvement in business conditions and the job market over the next six months. Consumers also remain extremely pessimistic ab...

Credit Card losses remain elevated in Jan’10

By Zarana on Wednesday, February 17 2010

The latest numbers on the performance of credit-card loans, from issuers including Capital One Financial Corp. (COF), Discover Financial Services (DFS), J.P. Morgan Chase & Co. (JPM) and Bank of America Corp. (BAC), indicate that consumers remain stressed by high rates of joblessness. Losses stemming from souring credit-card loans remain elevat...

U.S. unemployment rate falls unexpectedly, but job losses continue

By Zarana on Tuesday, February 09 2010

The job market outlook has improved with January's unexpected decline in the unemployment rate, which fell to 9.7 % from 10 % in December as a sign of gradual recovery in the overall economy. However, the job losses continue to mount further. Overall, the economy lost 20,000 jobs in January, disappointing expectations at some level that 15,000 jobs...

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 o...

Unemployment rate stays at 10% in Dec'09, but job losses are more than expected

By Administrator on Monday, January 11 2010

The U.S. economy ended the worst year of employment losses since the Great Depression with an unexpectedly large drop of 85,000 jobs in December. The unemployment rate for Dec 2009 was unchanged from Nov 2009 at 10% but that was only because droves of people, including many discouraged about the prospects of finding work, dropped out of the labor f...

Sales of New Homes Unexpectedly Fell in November to Seven-Month Low

By Administrator on Wednesday, December 23 2009

Sales of new homes plunged by 11% unexpectedly in November to the lowest level since April, a sign the housing market recovery will be rocky and heavily dependent on the government stimulus. The slump from October's pace shows that consumers are taking their time following an extension of a deadline for first-time buyers to qualify for a tax credit...

Discover Financial Q4’09 Profit drops

By Zarana on Monday, December 21 2009

Discover Financial Services Inc.'s (DFS) fiscal fourth quarter net earnings were down 14% from a year ago as losses stemming from credit card loans remain high. The company expects losses from souring card accounts to remain at elevated levels the next quarter. The fourth quarter lower net income available to common shareholders of $352.05 million,...

U.S. consumer credit falls $3.51 billion in October

By Zarana on Monday, December 14 2009

Americans borrowed less for a record ninth straight month in October, another sign that consumer spending will remain weak, making it harder for the economy to mount a sustained rebound. Consumer credit fell at an annual rate of $3.51 billion in October, while economists expected a $9.3 billion decline. Demand for revolving credit, the category th...

Retail Sales Rise in November

By Zarana on Monday, December 14 2009

Consumers stepped up their spending in November and grew more optimistic this month, unexpectedly retail sales rose more than the forecast. But stores remain worried that they may have to offer deeper discounts than planned, perhaps as early as this weekend because of mediocre sales so far. Consumer spending normally accounts for more than two-thi...

Credit Card Issuers Continue To See Higher Delinquencies In October

By Administrator on Monday, November 30 2009

Several major U.S. credit card companies are still facing double-digit defaults, suggesting that the high rates of unemployment continue to weigh down consumers. Institutions, such as Capital One (NYSE: COF), Bank of America (NYSE: BAC) and JP Morgan (NYSE: JPM) reported that credit card defaults fell in October.  However, a rise in delinquenc...

Consumer sentiment takes a tumble in November

By Zarana on Friday, November 13 2009

Confidence among U.S. consumers unexpectedly dropped in November as the loss of jobs threatened to undermine the biggest part of the economy. The Reuters/University of Michigan preliminary sentiment index decreased to a three-month low of 66 from 70.6 in October. Rising joblessness puts the economy at risk of slipping into a vicious circle of fi...

U.S. Economy close to Recovery?

By Zarana on Tuesday, November 03 2009

The American economy returned to growth during 2009's third quarter, a welcome departure from an extended period of painful economic contraction. While the return to growth is obviously a positive development, it does not suggest that problems with housing, declining consumer confidence, rising unemployment and continuing job losses are behind us. ...

Income remains flat for month of July

By Administrator on Monday, August 31 2009

Americans’ incomes were essentially flat last month and, except for the “cash for clunker” program, so was their spending, the Commerce Department reported Friday. After falling 1.1% from May to June, personal income in July rose less than 0.1%, slightly less than economists had expected. Personal spending rose 0.2%, marking th...

Fall in US GDP less than predicted

By Zarana on Thursday, August 27 2009

The U.S. economy shrank less than expected in the second quarter as smaller declines in consumer spending and exports offset record inventory cutbacks, while corporate profits rose by the most in four years. The Commerce Department said gross domestic product, which measures total goods and services output within U.S. borders, fell at a 1% annual ...

New home sales surge to highest rate in ten months

By Administrator on Thursday, August 27 2009

Sales of newly constructed homes leaped unexpectedly in July to hit their highest level since last September.  The new home sales jumped almost 10 percent from June, while orders for durable goods like appliances, planes and computers rose nearly 5 percent in July, the third increase in the past four months. New homes sold at an annualized ra...

Consumer Confidence beat forecasts

By Zarana on Wednesday, August 26 2009

Americans' pessimism about the economy appears to be lifting, with consumer expectations for the next six months hitting their most positive point since the recession began. But economists warned that consumer confidence remains far below levels associated with a healthy economy and might not lead to the increased spending critical for a broad re...

Bank of America shuns market, while the Rivals tap TALF

By Zarana on Wednesday, August 26 2009

JP Morgan Chase, Citigroup and American Express were among those who have taken advantage of TALF, the Fed's Term Asset-Backed Securities Loan Facility. Together, they've sold $21 billion in card-backed debt this year through the facility. But Bloomberg reports Bank of America, the only major card-issuer that didn’t sell any, lacks enough qua...

Capital one’s Credit Losses continue to mount

By Zarana on Monday, August 24 2009

Capital One Financial Corp. (COF) continued to face rising charge-offs and delinquencies in July on managed basis, as Americans continued to lose jobs and struggled to pay their debts. The credit-card lender turned bank has been struggling with increasing credit woes in recent months and has seen the economic slump threaten its balance sheet, leadi...

Target Corp. Posts Modest Quarterly Drop

By Zarana on Friday, August 21 2009

Discount retailer Target Corp.'s (TGT) fiscal second-quarter profit fell 6.4%, eighth consecutive quarterly profit decline, but the results were well above expectations as the discount retailer continued to focus on controlling expenses and declining crude oil prices, which lowered transportation costs. Even the credit-card business, though stil...

Credit card losses drop in July

By Zarana on Friday, August 21 2009

Credit card loan defaults, which have risen sharply in recent months, could peak sooner than expected. Better than forecast default rates for July reported by several credit card lenders increased the hope of the worst to end soon.  However, this does not mean the lenders are financially better off, as higher income-tax refunds and federal eff...

Another Sign of an Economic Recovery

By Zarana on Wednesday, August 12 2009

The U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected, giving the indication yet that the economy was recovering from a worst recession since great depression. The pace of U.S. job losses slowed more than forecast in July and the unemployment rate dropped for the first time in more ...

US Economy declines further, but at a slower pace

By Administrator on Wednesday, August 05 2009

The first, or advance, estimate of second-quarter GDP indicated that the U.S. economy continued to contract, although by a smaller-than-expected 1 percent at an annual rate compared to expectations of a 1.5 percent drop. However, the decline followed a downwardly revised 6.4 percent plunge in the first quarter (originally reported as -5.5 percent)...

Consumer confidence tumbles again

By Zarana on Friday, July 31 2009

United States high unemployment rate impacted consumer confidence again in July, the second straight month that people's faith in the economy has wavered. The New York research firm, Conference board, reported a decline in monthly index to 46.6 from 49.3 in July. The index is a combination of consumers’ perceptions of current economic condit...

US housing market showing signs of recovery

By Zarana on Friday, July 31 2009

Recent signs of a housing market turnaround were seen in new home sales data for June, which rose 11% over May's levels, though has declined 21.3% YOY. The latest spike was the biggest monthly gain in eight years. In addition, the existing home sales rose for the third straight month in June feeding optimism about the long suffering housing sector....

Capital One Posts $276 Million Loss in Second quarter

By Zarana on Sunday, July 26 2009

Capital one reports losses of $275 million reflecting mounting credit losses in consumer lending sections and the company's decision to repay government bailout funds. The second quarter net loss available to common shareholders was $275.5 million, or 65 cents per share, compared with a profit of $452.9 million, or $1.21, a year earlier. Capital O...

Amex’ Earnings Fall by 84% in second quarter

By Zarana on Sunday, July 26 2009

  American Express reported an 84% YOY drop in second-quarter earnings per share, at the same time expressed increased optimism for the coming quarter, reflecting improved trends by delinquent credit card and increase in purchase volume.   Amex posted earnings of $337m, or 9 cents per share, compared with earnings of $653m, or 56 cents...

Delinquency and Defaults on a peak across the Credit Card Industry

By Zarana on Wednesday, July 22 2009

  U.S. credit card companies said defaults and delinquencies were lower in June, an encouraging sign that borrowers are not in as bad shape as many analysts had feared. With American Express Co and Bank of America projecting better business in the second quarter of the year than forecasted,  the credit card industry portrays a glimmering...

Bank of America Earns $3.2 Billion in Second Quarter

By Zarana on Monday, July 20 2009

Strong revenue performance in the wholesale capital markets businesses and in home loans complemented Bank of America Corporation (NYSE: BAC) second-quarter 2009 earnings to post $3.2 billion net income diluted earnings per share were $0.33. Global Credit card services accounted to a net loss of $1.6 billion as credit costs rose in the weakening e...

Chase 2Q earnings soar 36% in Second quarter

By Zarana on Monday, July 20 2009

Strong performance in key divisions helped power JPMorgan Chase & Co. (NYSE: JPM) to a 36% jump in second-quarter profit in 2009, even as its provision for credit losses doubled. The bank has earned $2.72 billion, or 28 cents a share, in the quarter that closed June 30, up from $2 billion, or 53 cents a share, a year earlier. Among the six larg...

Credit Card Debt continues to drop further

By Zarana on Wednesday, July 15 2009

Credit card balances continued to drop in May, according to the data from the Federal Reserve, although the size of the drop marked a slowdown from the heated pace of decline in prior months. The Fed's monthly G.19 report on consumer credit, released for month of May, indicated that revolving credit, a loan category comprised almost entirely of cr...

US retail sales up again in June

By Zarana on Wednesday, July 15 2009

Retail sales advanced in June by the largest amount in five months, led by a surge in gasoline prices and a slight rebound in the feeble auto sector. Commerce Department data on Tuesday showed sales at U.S. retailers rose 0.6% from a month earlier, ahead of economists' expectations for a 0.4% advance. Gasoline stations showed strong gains, helped ...

Job Loss Claims driving high delinquencies

By Zarana on Monday, July 13 2009

Soaring unemployment and mounting debt are leaving consumers hard-pressed to make loan payments on everything from credit cards to cars. According to data from the American Bankers Associations, consumer delinquencies rose again in the first quarter of 2009 as job losses mounted. Balances on the credit card delinquencies, hit new record levels dur...

Credit Cards Payment Study

By Zarana on Monday, July 06 2009

With deteriorating outlook of economy, rising credit crunch in recent months, with unemployment topping 9.5% in May’09 – more and more borrowers are facing problems paying their credit card bills. Revolving credit, a close approximation of credit card debt, totaled $939.6 billion in March. The Federal Reserve reported that 6.5 percent ...

Effect of Credit Card Act 2009 on issuers

By Zarana on Monday, July 06 2009

Credit card issuers, already scrambling to comply with the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, 2009 are facing a difficult time ahead to find a source of revenue as the bill would decrease the interest income significantly.  The annual revenue that card issuers earn from interest revenue and penalties could d...

Changes after Credit Card Act 2009

By Zarana on Friday, July 03 2009

The newly minted Credit Card Accountability, Responsibility, and Disclosure Act of 2009 have been signed into law. Here’s the breakdown on the changes when the law comes into effect February 2010. 1. Universal Default Before Under Universal default term a particular lender can change the terms of a loan from the normal terms to the de...

Discover Financial Services Reports Second Quarter Results

By Zarana on Tuesday, June 30 2009

Discover Financial Services (NYSE: DFS) reported second quarter net income of  $226 million or $0.43 per share, driven by continued expansion in  net interest margin, further reductions in operating expenses and included the third payment in the antitrust settlement with Visa and MasterCard offset by higher loan loss provisions. Additiona...

U.S. credit card defaults rise to record in May

By Zarana on Wednesday, June 17 2009

With the series of releases of May Credit Card Trust data, U.S. credit card defaults rose to record highs in May signaling that consumers are still under pressure despite some signs of economic optimism. Bank of America Corp’s saw the largest increase among major issuers, rising two percentage points from April. The default rate for Securiti...

U.S. Retail Sales rises, Jobless claims drops

By Zarana on Wednesday, June 17 2009

U.S. Retail Sales rose in May for the first time in three month and new claims for jobless benefits last week hit January low, fueling hope of improving national economy. The Commerce Department said on Thursday that U.S. Total Retail Sales rose 0.5 percent in May 09, owing to strong gasoline prices, after falling by 0.2 percent in April. Also, a ...

Target Corp First Quarter 2009 Earnings Release

By Zarana on Friday, May 29 2009

General merchandise and food discount retailer Target Corp. (NYSE: TGT) on May 20, 2009 reported a 13.4% decline in profit for the first quarter from the year-ago period, hurt by the slowdown in consumer spending. However, its credit-card segment results were profitable. Gregg Steinhafel, chairman, president and chief executive officer of Target s...

Discover Card Master Trust I: Performance Review

By Zarana on Friday, May 29 2009

Discover Card Master Trust I owned by Discover Financial Services (NYSE: DFS) on May 15, 2009 reported a $303 million yield in month of April 2009, a decline of 18% from the April 2008. End of the period total credit card receivables for the month increased $1,024 million, or 3.0%, from the April of 2008, and month-end receivables increased $132 m...

Advanta to Close One Million Credit Card Accounts

By Zarana on Friday, May 29 2009

Advanta Corp. (NASDAQ: ADVNB; ADVNA) announced on May 11, that it has approved a plan designed to dramatically limit the Company’s credit loss exposure and maximize its capital and its liquidity measures.  Reacting to mounting losses from credit defaults, company officials decided to close down all of the firm's outstanding credit lines...

Capital One Earnings Release

By Administrator on Tuesday, April 28 2009

Capital One Financial Corp (NYSE: COF), a leading issuer of MasterCard and Visa credit cards, reported a first-quarter loss on Tuesday, hurt by growing credit losses, and higher provisions for bad loans. Although, all National Lending businesses reported profits in the first quarter of 2009 including U.S. Card business delivering $2.4 million this ...

JP Morgan Chase Earnings Release

By Administrator on Tuesday, April 28 2009

JPMorgan Chase & Co. (NYSE: JPM) reported first-quarter 2009 net income of $2.1 billion, compared with net income of $2.4 billion in the first quarter of 2008. Earnings per share were $0.40, compared with $0.67 in the first quarter of 2008. That was lower than the year-ago period profit, but it easily beat analyst expectation of $0.32 a share, ...

Citigroup Earnings Release

By Administrator on Tuesday, April 28 2009

Citigroup Inc. (NYSE: C) reported net income for the first quarter of 2009 of $1.6 billion and a loss per share of $0.18, based on 5,385 million shares outstanding which came as a positive surprise to the market beat analyst expectation of loss of $0.34 a share. Vikram Pandit, CEO, Citigroup said “Our results this quarter reflect the stre...

Bank of America Earnings Release

By Administrator on Tuesday, April 28 2009

Bank of America Corporation (NYSE: BAC) reported first-quarter 2009 net income of $4.2 billion. After preferred dividends, including $402 million paid to the U.S. government, diluted earnings per share were $0.44. However, Shares of Bank of America Inc. have taken a pounding Monday, after the company reporting earnings results that showed credit co...

American Express Earnings Release

By Administrator on Tuesday, April 28 2009

American Express Company (NYSE: AXP) reported first-quarter for year 2009 income from continuing operations of $443 million, down 58 percent from $1.0 billion a year ago. Diluted earnings per share from continuing operations were $0.32, down 64 percent from $0.89 a year ago. The results were better-than-expected earnings as it slashed costs and sai...

Target Corp Earnings Release

By Administrator on Tuesday, April 28 2009

Target Corporation (NYSE:TGT) reported net earnings of $609 million for the fourth quarter ended January 31, 2009, compared with $1,028 million in the fourth quarter ended February 2, 2008. Earnings per share in the fourth quarter decreased 34.4 percent to 81 cents from $1.23 in the same period a year ago. All earnings per share figures refer to di...

Discover Financial Services Earnings release

By Administrator on Tuesday, April 28 2009

Discover Financial Services (NYSE: DFS) reported results for the quarter ended Feb. 28, 2009, Net income for the first quarter of 2009 was $120 million, up from $81 million in the first quarter of 2008. Net income for the first quarter of 2009 includes approximately $297 million (after-tax) related to the Visa/MasterCard antitrust litigation settle...