Fitch Ratings said that in September credit card charge-offs for securitized accounts dropped to lows only seen once before in the 23-year history of the ratings agency’s indices.
The Fitch Prime Credit Card Charge-off Index dropped to 3.12% for the September collection period. The charge-off rate now stands two basis points above the all-time low for this index, reached in March 2006. Charge-offs fell 6.3% from the prior month and is down 25% year-over-year.
Fitch Prime Charge-off Index is now 73% below its peak of 11.52% reached in September 2009. “A material increase in charge-offs is unlikely prior to year-end,” said Fitch.
Delinquencies for credit card accounts also continued to improve in September. Fitch said that the 60+ day delinquencies remained flat month-over-month.
Fitch’s Prime 60+ Day Delinquency Index increased by one basis point month-over-month to 1.28% and remains 25% lower year-over-year. “The slight uptick in September is attributed to seasonality and is consistent with historical patterns,” said Fitch.
The ratings agency tracks over $116 billion of prime credit card ABS backed by approximately $237 billion of principal receivables via its index, which is primarily comprised of general purpose portfolios originated by bank institutions such as Bank of America, Citibank, Chase, Capital One and Discover.
On the retail side, ABS delinquencies continue to rise for the fourth straight month. According to Fitch’s Retail 60+ Day Delinquency Index, delinquencies reached 2.59%, a 7% jump from the previous month though still over 4% below the levels from one year ago and significantly below its longer-run average of 3.89%.
However the increase in late stage delinquencies hasn’t led to greater charge-offs for these accounts. Fitch said that its Retail Charge-off Index registered 5.74% for the September collection period, a six-year low for this index. “The Retail Charge-off Index was down 5.59% from the previous month and remains nearly 13% lower than one year ago,” said Fitch.
Fitch’s Retail Credit Card Index tracks more than $19 billion of retail or private label credit card ABS backed by over $32 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A., GE Money Bank and World Financial Network National Bank.