Credit-loss rates took a turn for the worse in August, according to monthly reports by the nation's largest credit card issuers.
The figures, released Tuesday, followed a month-over-month decline in the rate at which lenders wrote off debt as uncollectible in July, and underscore continuing distress in the industry from record levels of bad loans. The drop in the industrywide chargeoff rate in July was the first monthly decline since September 2008, according to an index maintained by Moody's Investors Service Inc.
The chargeoff rate at Citigroup Inc.'s securitization trust surged 211 basis points from the month prior to 12.14% in August. For collateral backing Bank of America Corp.'s credit card bonds, the chargeoff rate jumped 73 basis points to 14.54%. Both companies had posted month-over-month improvements in July.
Balances that were past due by 30 to 59 days at B of A increased by 9 basis points from the month prior to 1.95% of receivables, while balances that were past due by 30 days or more fell 11 basis points to 7.47%. At Citi, balances that were past due by 35 to 64 days increased by 6 basis points from the month prior to 1.49% of receivables, while balances that were past due by more than 35 days fell 13 basis points to 5.38%.
At JPMorgan Chase & Co., balances that were past due by 30 days or more increased by 32 basis points to 4.48%.
By contrast, credit trends continued to improve at American Express Co. in August. The chargeoff rate across its portfolio — including both securitized and balance sheet receivables — fell another 20 basis points from the month prior to 9%. The percentage of balances 30 days or more past due fell another 10 basis points to 4.1%. Amex has forecast that its chargeoff rate peaked in the second quarter at 10%.
Capital One Financial Corp.'s chargeoff rate fell 51 basis points from the month prior to 9.32%, while its percentage of balances 30 days or more past due increased 26 basis points to 5.09%.
Standard & Poor's Corp. expects the chargeoff rate for its index of credit card bonds to range from 10.5% to 11% during the next 12 months to 24 months under a baseline forecast for unemployment of 10.5% during the next 12 months to 18 months. The chargeoff rate for the S&P index was 9.8% in July.
