Amex Delinquencies Down .2%, Big Whoop
Amex delinquencies are down buuuuuut... don't go too crazy on the employer's Plum card just yet. Or does no one remember what Amex did early on to assure it wouldn't feel the full brunt of credit card defaults? Just making sure we keep things in perspective, kids. .2%? Oh that's fucking impressive. =/
AmEx 30-Day Delinquencies 4.2% In July Vs 4.4% In June
American Express Co. (AXP) said Monday that U.S. borrowers at least a month behind their card payments decreased modestly to 4.2% in July from 4.4% in June.(source)
This continued decline in delinquencies, a key gauge of future losses, is important because higher delinquencies force issuers to squirrel away capital to reserve for potential losses; ultimately, companies must write off loans if customers can't pay up. The slowing pace of delinquencies is also noteworthy because it comes at a time when seasonal factors - such as good behavior on the part of borrowers fueled by tax refund checks - are behind the card industry.
This monthly report card on the performance of credit-card loans, including those packaged into bonds, comes amid heightened scrutiny around credit as losses stemming from souring card loans pile up.
Issuers of plastic, including Capital One Financial Corp. (COF), JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C), Discover Financial Services Inc. (DFS) and American Express are also coping with sweeping legislation that will bite into income. To fight the losses, card issuers are scaling back on credit and getting tougher on whom they lend to.
AmEx wrote off 9.2% of its card loans, including those packaged into bonds. For the quarter ended June 30, the company wrote off 10% of its U.S. card loans, up from 8.5% in the first quarter and 5.3% a year ago.
The company said earlier this month that better than expected bankruptcy trends contributed to the decline in write-offs.
Down they go, watch 'em fall!
Speaking of Capital One, how you like these apples?
In regular monthly filing, Capital One Financial (NYSE:COF) reported that borrowers that are behind on payments had increased last month. The percentage of borrowers at least 30-days behind on payments increased to 4.83% in July from 4.77% in June. Furthermore, the credit card issuer wrote off 9.835% of its card loans last month, compared to 9.73% a month earlier. International operations showed charge-off rates worsened at an even faster rate from 9.26% to 9.76% in July.
Ouch, that's going to hurt. Perhaps COF should have taken a cue from Amex and paid customers to cut their cards a few months ago. Burn.