NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Credit Cards: Asset Quality Review 1Q13
(U.S. Card Delinquency Metrics Support Strong Credit Outlook)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707838
Recent declines in delinquency rates signal a strong near-term credit outlook for U.S. credit card issuers, according to a Fitch Ratings report.
Delinquencies of 30 days or more averaged 2.06% for the top general purpose card issuers in 1Q13; down 40 bps year over year and down 7 bps from the prior quarter. This trend suggests that material deterioration in credit card loss metrics is not imminent. Still, Fitch believes credit metrics are at unsustainable levels over the long term.
Fitch expects delinquency and loss rates to creep modestly higher over the remainder of 2013, although the agency believes credit metrics may stabilize at a rate lower than the historical average given changes in underwriting criteria, declines in subprime exposure and a broader focus on card transactors over revolvers.
Portfolio contraction continued at the larger banks in 4Q12 and 1Q13, while other issuers recorded modest portfolio expansion. Fitch believes the level of portfolio contraction among the top card issuers signals a near-bottoming of portfolio balances. Fitch expects low-to-mid single-digit portfolio growth in 2013.
Card segment profitability remained solid across the sector, with the top seven issuers posting a return on average loans of 4.1% in 1Q13, compared with 4.3% in 1Q12. The decline in returns primarily reflects a reduction in reserve releases, although releases continued across the space, even for issuers with portfolio growth.
Fitch expects provisions pose an increasing risk to bottom line earnings for most issuers over the balance of 2013.
The full report 'Credit Cards: Asset Quality Review 1Q13' is available at www.fitchratings.com.
Additional information is available at www.fitchratings.com.
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