Deliquencies for bankcards were lower or stable in April for six major issuers, although charge-offs were higher for four lenders, Standard & Poor's analysts reported in their midday commentary.
This is a mixed result for credit card ABS product, analysts said. American Express had the lowest 30+ day delinquency rate at 1.30% while Bank of America had the highest at 3.45%, S&P analysts noted.
Meanwhile, the charge-offs were 5.93% for Citigroup and 2.40% for Amex. They dipped four basis points to 2.60% for Discover Financial in April. Charge-offs and delinquencies are less than year-ago levels, S&P analysts stated.
Wells Fargo analysts also reported that the sector's credit performance stayed healthy in the April reporting or May distribution period, although it pulled back somewhat from levels seen recently.
A 25 basis-point-drop in terms of the portfolio yield index at 18.28% together with a 34 basis point rise in the charge-off rate index at 4.44% resulted int the excess spread index at 10.67% to dip by 60 basis points, analysts stated.
Inspite of these movements, Wells Fargo analysts think that credit performance is still quite strong and key forward-looking metrics show solid performance in the upcoming months. The delinquency index showed a new record low of 1.94%, as all six of the index issuers had lessened delinquencies for the third consecutive month.
In the meantime, the monthly payment rate index at 21.42% stayed just 43 basis points less than its all-time high, Wells Fargo analysts stated. Overall, consumers seemed still focused on managing household debt, analysts stated.
This week JPMorgan Chase sold a $1.6 billion 'AAA'-rated, two-year deal from its Chase Issuance Trust (CHAIT). According to Wells Fargo analysts, the credit card ABS was met with good investor demand, which caused the deal to be upsized by $600 million to $1.6 billion.
Analysts said that even though this deal has given some liquidity boost to the firm as it is caught up with trading-loss headlines, it merely offsets the CHAIT ABS' significant maturity schedule in 2012. In the past two months, $5.75 billion of CHAIT ABS have matured and an added $2.7 billion is scheduled to mature in June, analysts reported.
Analysts think that the credit card ABS market will still be shrinking with large bank issuers, including CHAIT, using other corporate fund sources including consumer deposits to fund their credit card portfolios. Nonetheless, these issuers might issue into the ABS market opportunistically, analysts stated.