Overall, Barclays Capital, in a note released Friday, said that bank credit card collateral performance was positive, although retail card performance deteriorated. But, credit metrics are staying within seasonal norms and historical levels, analysts from the bank added.
On Thursday, major bank and retail credit card ABS trusts released collateral performance reports for the October collection period. This is the November distribution date to noteholders, Barclays reported.
In aggregate, bank credit card collateral performance was generally positive after having mixed performance the previous month. Charge-offs fell for a third straight month, although delinquencies rose marginally. The aggregate yield improved and, together with the lessening in charge-offs, resulted in increased one-month excess spread, Barclays cited.
Three-month excess spread also improved. Specifically, charge-offs decreased two basis points to 3.64% from 3.66% the previous month. Delinquencies of 30 or more days rose two basis points to 2.42% after rising four basis points the previous month. The yield rose 24 basis points, to 18.35% from 18.12%. These, when taken together with falling charge-offs, resulted in a 34-basis point rise in one-month excess spread to 11.95%, compared with 11.61% the previous month, Barclays reported.
The three-month excess spread rose 18 basis points to 11.73% from 11.55% while the monthly payment rate rose 100 basis points to 22.41%. Aggregate trust credit card balances rose $3.4 billion (+1.3%), as a result mainly of growth in JPMorgan Chase’s CHAIT program, according to Barclays.
In terms of retail credit cards, the aggregate collateral performance was mostly weaker for the November distribution date with charge-offs breaking the five-month declining streak, and delinquencies were modestly higher, Barclays said.
Yield actually fell significantly and, when combined with the increase in charge-offs, resulted in a similar dip of one-month excess spread.
But, three-month excess spread rose. Charge-offs increased seven basis points to 5.62% after dipping 25 basis points the prior month, and delinquencies of 30 or more days rose a basis point to 3.62%. Yield fell 124 basis points to 26.42% after rising six basis points the previous month and, when combined with the rise in charge-offs, resulted in a 125 basis points dip in one-month excess spread, to 17.03%.
Three-month average excess spread rose 30 basis points to 17.80%. However, the monthly payment rate fell 93 basis points to 17.6% from 18.53% last month. The aggregate retail credit card trust receivable balances rose $37.4 million (+0.9%) over that period.