Bankcard originations hit a three-year high during the first five months of 2011, as banks eased their underwriting standards and started reextending credit to riskier borrowers, according to the credit bureau Equifax.
Banks issued almost 15 million new cards by the end of May 2011, but they are still not signing up nearly as many new card customers as they did before the financial crisis. Banks originated 28.5 million cards over the first five months of May 2007, according to Equifax's July National Credit Trends Report.
The report attributes the partial rebound in bankcard originations to subprime borrowers, or those with Equifax risk scores below 660. Within that group, originations rose almost 60% in May from the same month a year earlier.
New subprime bankcard origination levels for January through May were up 65% from a year earlier. That compares to a 63% decline in subprime bankcard originations over the same period from 2008 to 2009.
Banks are also extending more credit to their new card customers. Total new bankcard limits increased more than 27% year-over-year from January through May, and new subprime bankcard credit limits rose 68% over the same period, according to Equifax.
Subprime bankcard lending is expanding to even riskier borrowers, Equifax said, reporting growth among borrowers with scores below 600.
"The gains made in the issuance of new bankcards for subprime borrowers are evidence of the continued easing that we are witnessing in underwriting," Michael Koukounas, Equifax senior vice president of special client services, said in the release. "The rebound we are seeing in total new bankcard originations certainly provides some level of positive traction in the industry, but it should also be noted that we still have a long way to go to achieve a true return to normalcy for the market."