Big Banks See EMV Liability Opportunity

by Ron Mazursky 0

No news continues to be good news in terms of credit card portfolio performance. Updated Fitch ratings suggest continued improvement on the prime ABS front.

From Business Wire:

As such, Fitch anticipates stability in credit card ABS ratings for the foreseeable future given the robust enhancement levels and the structural features afforded to investors.

For the second consecutive month, Fitch’s Prime 60+ Day Delinquency Index reached a record low by declining to 1.48% in May. This represents a 4.5% drop in the level of 60+ day delinquencies month-over-month (MOM).

Recent declines in 60+ delinquencies have contributed to continued positive performance of Fitch’s Prime Credit Card Chargeoff Index, which for May, declined an additional six basis points (bps) MOM to reach 3.92%.

Retail (private label) cards are not so consistently positive, although the trend is hardly worrisome:

While performance for prime credit card ABS remains stellar, retail card loans did see some weakening last month. The Fitch Retail Chargeoff Index increased nearly 15% MOM to reach 6.91%. However, the Fitch Retail 60+ Day Delinquency Index declined by almost 4.5% MOM to 2.45% in May. This is two bps off the index’s historical low and may be indicative of lower retail credit card ABS chargeoffs in the coming months.

In general, consumers seem oriented to pay down existing debt. Recent improvements in consumer sentiment have yet to drive any real increased borrowing and card receivables.

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