Fitch: Growth and Portfolio Seasoning Will Normalize U.S. Credit Card Performance in 2015

NEW YORK--()--U.S. credit card asset quality is expected to begin normalizing in 2015, as delinquencies and charge-offs increase from current levels, according to a special report on U.S. credit card asset quality published today by Fitch Ratings.

Despite the likely deterioration in asset quality, ratings assigned to U.S. credit card lenders remain stable reflecting adequate liquidity, strong balance sheets and limited sensitivity to a rise in U.S. interest rates.

Credit card asset quality metrics again hit record lows in Q3'14. However, Fitch believes that late stage delinquency metrics may be signaling a possible inflection point in credit loss performance. Credit loss metrics will begin to weaken throughout 2015 as more recent vintages begin to season.

Over the longer term, credit metrics may stabilize at a rate lower than the historical average. This is attributable to changes in underwriting criteria and declines in subprime exposure, resulting from the implementation of the 2009 CARD Act, and a broader industry-wide focus on credit card transactors over revolvers.

Still, Fitch believes underwriting standards will likely continue to gradually loosen to support near-term corporate objectives.

A key industry focus in 2015 will be fraud prevention and changes in payment technologies, although new payment systems will be highly dependent on consumer adoption and merchant acceptance. Fitch notes that new payment technologies could increase purchase volumes and enhance fraud protection in the near-term, but also pose a competitive threat over the longer-term.

The full report 'U.S. Credit Cards: Asset Quality Review 3Q 2014' is available at 'www.fitchratings.com.'

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: U.S. Credit Cards: Asset Quality Review 3Q14 (Growth and Portfolio Seasoning Will Contribute to Normalizing Credit Performance)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=810728

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Contacts

Fitch Ratings
Brendan Sheehy
Director
+1 212-908-9138
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com

Contacts

Fitch Ratings
Brendan Sheehy
Director
+1 212-908-9138
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com