The shakeout from the recession is still being felt by credit card issuers as delinquency and charge-offs reach record levels. Card delinquency in March hit the highest level in nearly five years and charge-offs are running at rates not seen since the recession of 1990-91. Wall Street analysts are indicating charge-offs among credit card-backed securities will spike this month following an artificially low loss rate in February. The amount of credit card debt that is more than 30 days past due now stands at 5.54%, compared to 4.93% one year ago. Preliminary data suggests the delinquency figure for April may reach 5.58%. Charge-offs are now at ten-year highs hitting 6.59% in March, compared to 4.74% one year ago. Preliminary data suggests the figure for April may reach 6.63%. Fitch Ratings and Standard & Poor’s say that MBNA’s September 2001 payment holiday will push up the index among credit card-backed bonds as an abnormally large bucket of late stage delinquencies is recognized as charge-offs. Results for the March 2002 collection period already show MBNA’s master trust charge-offs at 6.95%. Due to Sept. 11th and the related delays in mail delivery of account statements, MBNA postponed the date on which some accounts would become 30 days delinquent in September. In essence, MBNA granted a one-month grace period for its customers. As a result, some accounts that would have charged off in February 2002 will now instead move to a March 2002 charge-off date. Thus, MBNA’s reported February 2002 delinquency ratios were higher than normal and its reported losses were lower than they would have had the September postponement not occurred. Fitch said last week that current monthly charge-offs are showing a widespread increase, with 68% of master trusts reporting higher versus lower charge-offs as companies like Citibank, Discover and Providian reported the largest month-to-month increases.
Bank Credit Card Delinquencies Jan 01: 4.84% Feb. 01: 4.89% Mar. 01: 4.93% Apr. 01: 5.09% May 01: 5.06% Jun. 01: 5.02% Jul. 01: 4.97% Aug. 01: 4.93% Sep. 01: 5.04% Oct. 01: 5.13% Nov. 01: 5.29% Dec. 01: 5.38% Jan 02: 5.41% Feb. 02: 5.47% Mar. 02: 5.54% Bank Credit Card Charge-offs Jan 01: 4.65% Feb 01: 4.70% Mar 01: 4.74% Apr 01: 4.83% May 01: 4.93% Jun 01: 5.10% Jul 01: 5.31% Aug 01: 5.52% Sep 01: 5.60% Oct 01: 6.01% Nov 01: 6.33% Dec 01: 6.42% Jan 02: 6.48% Feb 02: 6.53% Mar 02: 6.59%
Source: CardData (www.carddata.com)