Credit Card Defaults... We Has Them


JPMorgan Chase & Co., (JPM) the biggest U.S. credit-card lender, said the unit’s third-quarter write- offs rose and the company forecast more next year, signaling that the industry’s record losses may have longer to run.

Card write-offs, excluding loans acquired from Washington Mutual Inc., rose to 9.41 percent on an annualized basis, from 8.97 percent in the previous quarter, JPMorgan said in its quarterly earnings statement today. That means September defaults probably increased, said Michael Taiano, an analyst at Sandler O’Neill & Partners LP.

A similar rise at other card issuers would push the industry’s U.S. losses beyond the record 11.49 percent set in August, as measured by Moody’s Investors Service. The nation’s six biggest card issuers, including Bank of America Corp. and Citigroup Inc., are scheduled to release monthly data tomorrow. The companies have blamed the recession and rising joblessness.

“With unemployment ticking higher, you’d expect these losses to get worse before they get better,” said Joseph Mason, a Louisiana State University banking professor and former economist at the Office of the Comptroller of the Currency. “We’re definitely not out of the woods yet.”

JPMorgan’s credit-card division posted a $700 million quarterly loss, its fourth straight, and the deficit may widen to $1 billion in the first period of next year, Chief Executive Jamie Dimon said today on a conference call with analysts. The card unit’s losses for 12 months total $2.29 billion.

The entire company earned $3.59 billion during the third quarter, the most since the subprime mortgage market collapsed in 2007.

Credit-card defaults typically track the U.S. jobless rate, which climbed to 9.8 percent in September, the highest since 1983. Card losses may peak at 12 percent to 13 percent in mid- 2010, Moody’s has said.

Oh wait, that's not all. Capital One gets in on the hot default action and it's no wonder - I seem to recall receiving about 15 of their credit card offers when I was 19, unemployed, and couch-surfing in San Francisco. Just sayin.

Washington Business Journal

Capital One Financial Corp. (COF) wrote off more bad credit card loans in September and saw its delinquencies also rise.

The company, in a regulatory filing with the Securities and Exchange Commission, said charge-offs in the U.S. rose to an annualized rate of 9.77 percent in September after a decline to 9.32 percent in August. Internationally they also increased to an annualized rate of 9.24 percent from August's level of 8.6 percent.

Capital One's 30-day credit card delinquencies continued to climb in September, increasing to 5.38 percent of the portfolio from 5.09 percent in August and 4.83 percent in July.International delinquencies eased slightly to 6.63 percent from 6.67 percent in August and 6.68 percent in July.

Capital One's auto-finance area continues to have the highest delinquency rate of its the three lending units, 9.24 percent in September, but the lowest charge-off rate, an annualized rate of 4.58 percent.

Auto-finance, huh? So if they're already hurting, what do you think is going to happen when the orgasmic delight of Cash for Clunkers comes due? Yeah, that's what I thought.

0% down! 0% balance transfers!

The irony of the easy money of the past is that not even ZIRP can bring this baby back to life.

If the economy were a dick, it'd be shrunken and limp. Doesn't make for a very fun fapfapfap, now does it?

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.


cjn said...

Jesus, where did you get that image?

the internets, homie, the internets.

God bless Al Gore for inventing them.


Anonymous said...

Ah. Credit card losses , not to worry , they'll more than make up for that in new innovative robbery , ... i mean "fees" , being piled on before the poltiburo consumer protection ( ha what a laugh) starts Nov 1 ?