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.

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.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...

Speaking of Capital One, how you like these apples?

Funny thing, I had a call from Cap 0ne on Thursday morning from the fraud department. They wanted to know about a 1.03 charge on my account. When asked, I told them I had never heard of the company who billed the charge. They told me it was likely my card was phished and they were canceling my account immediately.

I received the replacement card today but I must warn everyone out there - if you buy something for .95 plus tax and it works out to 1.03 look out - Cap 0ne may be out to get YOU!

Here's an even BETTER idea, Anon, let's return to wampum and try "living within our means"...

(disclosure: I don't have any credit cards. life is rough but better than the alternative of a collar around my neck)

But yes, Capital One is out to get you. It's Chase I'm more worried about. Capital One is trying to make up for all those really crappy "bets" they made on non-creditworthy individuals back in the 2001 - 2005 "boom".


Bill said...

Fed: Delinquency Rates Surged in Q2 2009
by CalculatedRisk on 8/17/2009 02:42:00 PM

I have been trying to jibe these two contradicting statements . Can't . Either they are up or down , which is it ? Or just more smoke and mirrors. What say ye oh Jr. Accountant ?


Hey Bill,

Like I said, I think Amex's are down because they punted a bunch of customers in February. I mean, really it's only POINT TWO percent anyway and by all reports all the other big CC players - COF, BAC, JPM, C, etc - are still hurting with charge offs. Also, think about it; if your ARM adjusted you into a $4000 mortgage payment but your credit card minimum is only $25 and you just lost your job, which will you pay?

Also, I think there might be some accounting magic at work too... not sure where the additional jacked up fees these card companies have been charging for most of Q2 fit in here but I wouldn't be surprised to see some "offsetting" (read: fraud) going on against losses.

Who even knows anymore?

Hope that helps, Bill!!