After Stabilizing Credit Card Charge-Offs Turn Up Again (JPM, COF, DFS, BAC, AXP)
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Most of the major credit card issuers reported on Tuesday that charge-offs for November rose after two months of showing progress. This has sent shares down across the industry, as the consumer continues to be stressed in the current economy. The news also heightens fears of a double dip recession.
JPMorgan Chase & Co. (NYSE: JPM) reported the biggest increase among the largest credit card issuers as charge-offs for the company rose to 8.81 percent from 8.02 percent in October.
Other companies that showed significant increases include Capital One Financial Corp (NYSE: COF) which reported charge-off rates being up to 9.60 percent in November, compared to 9.04 percent in October, and Discover Financial Services (NYSE: DFS) up to 8.98 percent from 8.54 percent.
Bank of America Corp. (NYSE: BAC) did report a decline in expected charge-offs, dropping to 13.00 percent from 13.22 percent, but the company still has the highest default and delinquency rate among the major credit card issuers.
American Express Inc. (NYSE: AXP), the biggest U.S. credit card company in terms of purchase volume, also reported a slight improvement in charge-offs going to 7.6 percent in November from 7.8 percent in October.
Charge-offs by the credit card companies generally follow the same pattern as the unemployment rate which improved slightly in November to 10.0 percent from the 26-year high of 10.2 percent in October. Analysts still expect unemployment rates to stay high throughout 2010.
Good news for the credit card industry came from a drop in delinquency rates, for companies like JPMorgan and Discover, after several months of increases. This indicates that charge-offs could peak as early as the first quarter of next year.
The shares of these companies are down across the board, weighing on the stock market Tuesday.
American Express shares are down 0.73 percent to $40.98, Discover is down 2.91 percent to $16.01, Capital One down 2.29 percent to $40.11, Bank of America down 2.75 to $15.20 and JPMorgan down 2.18 percent to $40.86.
JPMorgan Chase & Co. (NYSE: JPM) reported the biggest increase among the largest credit card issuers as charge-offs for the company rose to 8.81 percent from 8.02 percent in October.
Other companies that showed significant increases include Capital One Financial Corp (NYSE: COF) which reported charge-off rates being up to 9.60 percent in November, compared to 9.04 percent in October, and Discover Financial Services (NYSE: DFS) up to 8.98 percent from 8.54 percent.
Bank of America Corp. (NYSE: BAC) did report a decline in expected charge-offs, dropping to 13.00 percent from 13.22 percent, but the company still has the highest default and delinquency rate among the major credit card issuers.
American Express Inc. (NYSE: AXP), the biggest U.S. credit card company in terms of purchase volume, also reported a slight improvement in charge-offs going to 7.6 percent in November from 7.8 percent in October.
Charge-offs by the credit card companies generally follow the same pattern as the unemployment rate which improved slightly in November to 10.0 percent from the 26-year high of 10.2 percent in October. Analysts still expect unemployment rates to stay high throughout 2010.
Good news for the credit card industry came from a drop in delinquency rates, for companies like JPMorgan and Discover, after several months of increases. This indicates that charge-offs could peak as early as the first quarter of next year.
The shares of these companies are down across the board, weighing on the stock market Tuesday.
American Express shares are down 0.73 percent to $40.98, Discover is down 2.91 percent to $16.01, Capital One down 2.29 percent to $40.11, Bank of America down 2.75 to $15.20 and JPMorgan down 2.18 percent to $40.86.
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