Lenders concerned about consumer credit quality may find some encouragement in the American Bankers Association's delinquency report for the third quarter.

Though the group's indicators of past-due consumer loans continued to rise in the third quarter, as expected, the most closely watched delinquency rates were up only slightly from the second quarter.

But the trend, especially viewed year to year, still disturbs many analysts. The ABA's indexes for bank cards and closed-end loans have been rising for four quarters.

"You worry coming into the holiday season that those who already are having difficulty will not show any restraint and will continue to use the available lines they have (and) create greater problems in the future," said James Chessen, chief economist at the ABA.

The association's seasonally adjusted composite index of delinquencies showed that 1.98% of participating banks' closed-end consumer loan accounts were at least 30 days past due as of Sept. 30.

The ratio was 3 basis points higher than at the end of the second quarter, and 32 basis points above the 1.66% reported for the third quarter a year ago.

On bank card accounts, which are not included in the composite, delinquent accounts rose 4 basis points in the third quarter, to 3.30%. The ABA said the ratio is at its second-highest point in the last 10 years.

The degree of change was less than between the first and second quarters, when the composite rose 13 basis points and the credit card indicator 8 basis points.

Meanwhile, the percentages of loan dollars at least 30 days past due are rising at a faster pace.

For example, from the second to the third quarter there was an 11% rise in the composite, to 1.63%. In the same period, past-due bank card dollars rose 18%, to 4.21%.

"That's saying that while the numbers of individuals having difficulty may be slowing," Mr. Chessen said, "the dollars at stake are bigger, and that obviously raises some concerns about what kind of losses may occur."

Meanwhile, the Federal Reserve Board reported that consumer borrowing rose to $10.6 billion in October, to a record $1 trillion of outstandings.

In the past decade, the ABA pointed out, bank card delinquencies have been more volatile than closed-end installment loans. In fact, revolving bank card credit outstanding has outpaced closed-end installment credit in recent months, the ABA said.

Among others analyzing card delinquencies, Bankcard Barometer, a newsletter from RAM Research in Frederick, Md., found that the overall annualized credit card delinquency rate now stands at 4.38%, the highest in two years. Accounts 30 days past due rose 2 basis points in December, to 1.80%.

Robert B. McKinley, president of RAM, noted that consumers have downshifted slightly in their fourth-quarter spending from a year ago. "They may go another gear down in the first quarter," he said. "That will be the quarter when everyone is watching to see whether delinquencies and chargeoffs will moderate. It may not be all that bad."

Moody's Investors Service Inc. reported that credit card writeoffs in securitized portfolios rose to 4.27% of outstanding balances in the third quarter from 3.83% a year earlier. Edward Bankole, the senior analyst responsible for the indexes, said it was the sharpest year-over-year increase since January 1992.

He attributed the increase in the chargeoff rate to a recent upturn in consumer bankruptcy filings. However, Moody's said this rate is distorted by the rapid growth of card loans - 28% over a year's time, to $299 billion in June.

"It's like hitting a bumpy stretch of road when you're driving," Mr. Chessen said. "The natural tendency is to slow down and be much more cautious. It doesn't mean you stop the car, it means you proceed with greater care until you pass that bumpy stretch.

"I think that's what lenders are doing," the economist continued. "They're being careful. They're evaluating the systems they have in place, they're being more aggressive in pursuing delinquent accounts, and they're not as anxious to extend lines of credit" as they were before.

In the ABA's index, the biggest decrease in delinquencies was reported for direct auto loans, down 28 basis points, to 1.65%. The biggest increase, however, came from indirect auto loans, which jumped 20 basis points, to 1.99%.

Open-end home equity lines of credit had the lowest delinquency rate, 0.82%.

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