Capital One

Lenders have spent months puzzled by the persistently low delinquencies on their credit cards. Now, they’re seizing the moment.

Delinquencies have been ticking up since the start of the coronavirus pandemic and Capital One is warning of more pain unless the government provides additional relief to tenants and landlords.

Since March, issuers have tightened their criteria for opening new accounts and closed millions of existing ones in hopes of avoiding waves of defaults.

The ratings firm also took negative action with respect to Ally, Synchrony, Discover, Sallie Mae and Navient, citing the impact that the coronavirus crisis is having on their revenues and profits.

Closed showrooms, temporary bans on repossessions and a sudden spike in unemployment have dimmed the prospects of a sector that has boomed since the last recession.

The average price of a previously owned car has fallen in two consecutive months, and if the trend continues, lenders could see losses mount, Richard Fairbank said this week.

After rising between 2016 and 2018, the card issuer's charge-off rates are now steady. The trend reflects both the impact of tighter underwriting standards and the continued resilience of U.S. consumers.

The lender has not sponsored an asset-backed transaction since 2007, according to presale reports.

Executives from Ally Financial and Santander Consumer USA gave rosy outlooks about 2019 consumer trends, while other banks that rely less heavily on car lending offered more cautious appraisals.

In selling its Walmart credit card portfolio to Capital One and extending a partnership with Sam’s Club that appeared to be in peril, Synchrony Financial avoids an expensive legal battle with the world’s largest retailer.