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Fitch: Charge-offs continue decline in prime/retail card ABS

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Prime credit-card and retail-card charge-off rates have continued to fall in card-backed securitizations, according to the latest figures from Fitch Ratings tracking monthly performance of the asset class.

In a monthly update published Thursday, Fitch’s Prime Credit Card Charge-off Index for August (which incorporates figures compiled from July trustee reports) was lower at 3.01% from 3.04% in the previous month’s index.

It was a third-consecutive month of declining charge-offs for accounts held in prime bank-card portfolios that back bonds sold to investors, after hitting a one-year peak of 3.31% for the April index.

Meanwhile, the agency’s retail credit-card index tracking charge-offs fell to 6.62%, registering its lowest level on the index since October 2018 (as reported in the November 2018 index), according to Fitch.

“Current charge-off performance represents a 12.4% year-over-year improvement,” Fitch’s release stated.

Monthly payment rates – which measure the ratio of repayments relative to the outstanding account balances – also showed improvement. Credit-card holders boosted the MPR index to 31.28%, compared to 29.92% from the prior month (however, it was largely similar to the 31.62% rate from a year ago).

The retail MPR index rose to 17.21% from 16.9% in the July report that covered June card performance.

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Credit card ABS Fitch