Fitch: U.S. Credit Card ABS Remains Strong despite Mixed Macro Conditions

NEW YORK--(BUSINESS WIRE)-- Despite lower than expected GDP growth, U.S. credit card ABS continues to exhibit positive performance to start the second quarter, according to the latest monthly index results from Fitch Ratings.

On Wednesday, the Commerce Department reported that GDP rose at a 0.2% seasonally adjusted annual rate for first quarter-2015 (1Q'15). This was lower than the expected growth of 1%. GDP had grown at a pace of 2.2% for 4Q'14. On a positive note, jobless claims fell 34,000 for the week ending April 25, currently standing at 262,000, their lowest level since April 15, 2000.

The Bureau of Labor Statistics reported today that the four-week average currently stands at 283,750, a decline of 1,250 from the prior week's average, a further indication of an improving labor market. . Consumer sentiment remains strong at 95.9 for mid-April, up from 93.0 for the end of March and compared to 91.2 for the middle of March. This metric has not fallen below 93 since December 2014, after averaging 84.13% for 2014. All indications should point to continued strong performance in the short term.

Fitch's Prime Credit Card Gross Yield Index increased for the second month in a row, reaching its highest level since September 2011. At 19.54%, the index for April was 3.94% higher month-over-month (MOM) and 2.20% higher year-over-year (YOY). The health of the credit card trusts is further evident from the performance of the Prime Three-Month Average Excess Spread Index. The index increased nine basis points (bps) this month to 13.41%, and is now 2.92% higher YOY.

Fitch's Prime Credit Card Monthly Payment Rate (MPR) Index bounced back from a decrease last month improving to 28.06%, the index's third highest value ever. The increase registered at 7.92% higher MOM, and is 5.05% higher compared to the prior year.

Fitch's Prime Credit Card 60+ Delinquency Index decreased 7.96% in April to 1.04%. The index is 11.11% lower YOY. This metric indicates the percentage of balances with borrowers who have missed two or more payments. Fitch's Prime Credit Card Chargeoff Index increased for the second month in a row. The index registered at 2.84%, which is 2.16% higher MOM. The index is still 6.58% lower compared to the same period last year and remains 75% lower than its all-time high from 2009.

Fitch's Prime Credit Card Index was established in 1991 and tracks over $145.4 billion of prime credit card ABS backed by approximately $253.5 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.

Fitch's Retail Credit Card Chargeoff Index decreased 42 bps in April to 6.12%. The index is 6.42% lower MOM and 7.97% YOY. Fitch's Retail Credit Card 60+ Delinquency Index also decreased this month to 3.05%. The index is now 7.85% lower MOM and 26.15% lower YOY.

Fitch's Retail Credit Card Gross Yield Index decreased 1.78% this month to 27.69%. During the same period, Fitch's Retail Three-Month Excess Spread Index also decreased this month, falling 1.45% to 17.57%. Fitch's Retail Credit Card MPR Index decreased for the second month in a row. The index decreased 40 bps to 15.44% and is now 2.53% lower MOM.

Fitch's Retail Credit Card Index was established in 2004 and tracks more than $20.7 billion of retail or private label credit card ABS backed by over $31.2 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). There are more than 165 retailers in the index, including Walmart, Sears, Home Depot, Federated, Lowes, J.C. Penney, L Brands, Bon Ton, and Dillard's, among others.

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

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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
[email protected]

Source: Fitch Ratings

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