Capital One Financial Corp. today reported lower-than-expected charge-off and delinquency rates on its U.S. credit cards for February, prompting at least one securities firm to suggest credit card charge-offs as a whole may begin to decline during the second quarter.
In a report to investors today, Barclays Capital analysts Bruce Harting and Mark DeVries wrote that, although it is too soon to conclude charge-offs have peaked, “with delinquencies now declining at a healthy clip, we would expect the charge-off rate to begin to drop materially starting in the second quarter of 2010.”
In a Securities and Exchange Commission filing today, Cap One said the annualized net charge-off rate on outstanding receivables for its U.S. credit cards was 10.19%, 22 basis points lower than 10.41% in January. The delinquency rate for card accounts at least 30 days past due was 5.51%, 29 basis points below January’s 5.8% rate.
Cap One’s charge-off and delinquency data for February was “quite a surprise” given that Cap One executives in January told analysts they expected the average charge-off rate for the first quarter of this year to exceed 11%, the Barclays analysts wrote. If present trends continue, the analysts suggested, Cap One is “below trend to get an average 11% (charge-off rate) for the (second) quarter.”
