Nomura Securities on Credit Cards: January Card Data – Good Credit, So-So Loan Growth

Nomura Securities on Credit Cards: January Card Data – Good Credit, So-So Loan Growth

Analyst, Brain Foran, said, "Over the past few months, loan growth in U.S. credit cards had been accelerating, while credit improvement had been decelerating. In January, these trends switched places, as delinquencies beat normal seasonality by a good margin, but loan growth did not. Early delinquencies were down 2bp vs. normal seasonality of up 2bp. Total delinquencies were up 1bp, but this is much better than normal seasonality of +10bp in January. Loans were down 2.9%, in line with normal January seasonality―over the past ten years, loans have gone down by 3% on average in January. Charge-offs are already at low levels, with the average for the group at 4.0% in January vs. a 4.3% average during the 1990s and a 5.8% average for the 2000s. Discover was a positive standout, as chargeoffs hit 2.75% (we had modeled 3% for 1Q) and early delinquencies are still inching lower. Capital One's data were a bit disappointing, with delinquencies +12bp while loans were in line with peers at -2.8%. This, of course, was overshadowed by the positive news that the Fed approved the ING Direct deal."

Card companies of note: Citi (NYSE: C), JPMorgan (NYSE: JPM), BankofAmerica (NYSE: BAC), Discover Financial (NYSE: DFS), Capital One (NYSE: COF) and American Express (NYSE: AXP)

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