Fitch: New Year, Similarly Strong Start for U.S. Credit Card ABS

NEW YORK--()--U.S. prime credit card ABS collateral metrics began 2015 in much the same way last year ended following positive macroeconomic news, according to the latest index results from Fitch Ratings.

Most metrics posted month-over-month (MOM) improvements in January as unemployment and jobless claims continue to fall and consumer confidence marches higher.

The Bureau of Labor Statistics reported that the economy added 252,000 jobs in December. Job creation in 2014 represented the largest annual gain since 1999, when an average of 246,000 jobs was added per month. The strong job creation helped push unemployment down in December to 5.6% from 5.8%.

Similarly, for the week ending Jan. 26, initial jobless claims decreased by 43,000 to 265,000 (seasonally adjusted), representing a 15-year low. The four-week moving average for initial claims fell by 8,250 to 298,500, and the insured unemployment rate decreased by 71,000 to 2.4 million for the week ending Jan. 17. The strong job reports point to an improving labor market. In addition, the Conference Board's consumer confidence index also increased in January to 102.9 from 93.1 in December. This was the highest level since August 2007.

Fitch's Prime Credit Card Chargeoff Index increased for the second month in a row to 2.81%. The index is still 10.79% lower year-over-year (YOY) and 75.6% below its all-time high of 11.52% from April 2010.

While chargeoffs increased, Fitch's Prime Credit Card 60+ Day Delinquency Index declined 92 basis points (bps) for the December collection period to 1.08%. The delinquency index is now 10% lower YOY and is 76.2% below its all-time high of 4.54% that was reached in January 2010.

In line with seasonal trends, Fitch's Prime Credit Card Monthly Payment Rate (MPR) Index increased for the January reporting period, climbing 13.51% MOM to 28.65%. This index is now at its highest level since the inception of Fitch's Prime Credit Card Index in 1991.

Similar to MPR, Fitch's Prime Credit Card Gross Yield Index increased 5.21% MOM to 19.40%. The Gross Yield index has increased for the January reporting period every year since 2009. The increase in gross yield contributed to an increase in Fitch's Three-Month Average Excess Spread Index to 13.67%. This index stands at over twice its lifetime average of 6.68%.

Fitch's Prime Credit Card Index was established in 1991 and tracks over $147.8 billion of prime credit card ABS backed by approximately $261.8 billion of principal receivables. The index is primarily comprised of general purpose portfolios originated by institutions such as Bank of America, Citibank, Chase, Capital One, Discover, etc.

Retail card performance also showed improvements in chargeoffs, delinquencies, payment rates and excess spread. Additionally, gross yield levels faired less favorably according to Fitch's Retail Credit Card Indices.

Fitch's Retail Credit Card Chargeoff Index decreased 62 bps MOM, falling to 6.38%. This index has declined 4.35% YOY and is now 52.4% below its high of 13.41% reached in March 2010.

Fitch's Retail Credit Card 60+ day Delinquency Index also decreased MOM, falling 5.32% to 2.49%. Advances were also seen in Fitch's Retail Credit Card Monthly Payment Rate Index, which at 16.04% was up 42 bps MOM.

Retail gross yield, as measured by Fitch's Retail Credit Card Gross Yield Index, declined to 27.03% in January (falling 3.84% MOM). Despite this monthly decline, gross yield remains 3.60% higher YOY. Fitch's Retail Credit Card Three-month Average Excess Spread Index increased by 31 bps to 17.76%.

Fitch's Retail Credit Card Index tracks more than $19.7 billion of retail or private label credit card ABS backed by over $32.5 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A, Synchrony Financial (Formerly GE Capital Retail Bank), and Comenity Bank (formerly World Financial Network National Bank). More than 165 retailers are incorporated including Walmart, Sears, Home Depot, Federated, Lowes, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's, among others.

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

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Jenny Ovalle
Associate Director
+1 212-908-0849
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Michael Dean
Managing Director
+1 212-908-0556
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Jenny Ovalle
Associate Director
+1 212-908-0849
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Michael Dean
Managing Director
+1 212-908-0556
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com