In the last month of 2023, credit card net charge-offs increased and delinquencies were little changed from the previous month, as consumer spending stayed resilient, finishing the year without the long-predicted recession.
Taking a longer view, the average delinuency and net charge-off (“NCO”) rates have stayed above prepandemic levels for the past several months. However, delinquency and net charge-off rates at three banks — JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Bank of America (NYSE:BAC) — have stayed below their December 2019 levels. American Express’s (NYSE:AXP) U.S. U.S. consumer card delinquency rate is hovering below its December 2019 level, which its net charge-off rate has slightly exceeded the prepandemic level, as seen in the chart below.
The credit card issuers that saw credit quality deteriorate the most are Bread Financial Holdings (NYSE:BFH) and Capital One Financial (NYSE:COF). BFH’s NCO rate is more than 200 basis points higher than its December 2019 level, and COF’s is more than 100 bps higher.
Recall that credit card metrics stayed unusually strong in 2020 and 2021 as the U.S. government provided fiscal stimulus and lenders offered forbearance plans to consumers soon after the pandemic shocked the economy. Since then, both credit card delinquencies and NCOs have been slowly climbing to more normal levels.
The one card issuer absent from December’s table is Discover Financial (NYSE:DFS), which doesn’t report credit card metrics separately for the last month of each quarter. For Q4, DFS’s credit card delinquency rate was 3.87%, up 46 bps Q/Q and up 134 bps Y/Y. Its NCO was 4.68%, 65 bps higher than Q3 and 231 bps higher than Q4 2022.
During the month, the lenders’ data show that borrowing continued to climb as well. Loan balances at the end of the month rose to $400.6B, a 2.0% increase from November and 9.2% increase from Dec. 31, 2022.
2023 |
bps change, Dec. 2023 to Dec. 2019 |
|||||||
Company |
Ticker |
Type |
Dec. |
Nov. |
Oct. |
3-month average |
Dec. 2019 |
|
Capital One |
COF |
delinquency |
4.61% |
4.55% |
4.48% |
4.55% |
3.93% |
68 |
charge-off |
5.78% |
5.19% |
5.08% |
5.35% |
4.43% |
135 |
||
American Express |
AXP |
delinquency |
1.40% |
1.40% |
1.30% |
1.37% |
1.60% |
-20 |
charge-off |
2.50% |
1.70% |
1.90% |
2.03% |
2.40% |
10 |
||
JPM |
delinquency |
1.00% |
0.99% |
0.98% |
0.99% |
1.17% |
-17 |
|
charge-off |
1.69% |
1.75% |
1.65% |
1.70% |
2.20% |
-51 |
||
Synchrony |
NYSE:SYF |
delinquency |
4.70% |
4.70% |
4.60% |
4.67% |
4.60% |
10 |
adjusted charge-off |
5.60% |
5.60% |
5.60% |
5.60% |
4.90% |
70 |
||
Bread Financial |
BFH |
delinquency |
6.50% |
6.50% |
6.50% |
6.50% |
5.80% |
70 |
charge-off |
8.20% |
7.90% |
8.00% |
8.03% |
6.10% |
210 |
||
C |
delinquency |
1.45% |
1.47% |
1.39% |
1.44% |
1.56% |
-11 |
|
charge-off |
2.34% |
2.21% |
2.07% |
2.21% |
2.77% |
-43 |
||
BAC |
delinquency |
1.42% |
1.41% |
1.37% |
1.40% |
1.60% |
-18 |
|
charge-off |
2.27% |
2.24% |
2.06% |
2.19% |
2.54% |
-27 |
||
Avg. delinquency |
3.01% |
3.00% |
2.95% |
2.99% |
2.89% |
12 |
||
Avg.charge-off |
4.05% |
3.32% |
3.77% |
3.71% |
3.17% |
88 |
||
Avg. delinquency ex-BFH |
2.43% |
2.42% |
2.53% |
2.46% |
2.41% |
2 |
||
Avg. charge-off ex-BFH |
3.36% |
3.12% |
3.25% |
3.24% |
3.21% |
15 |
Loans at period-end, $ billions |
|||||
Bank |
Dec. |
Nov. |
M/M percent change |
Dec. 2022 |
Y/Y percent change |
Capital One |
147.7 |
144.9 |
1.93% |
131.6 |
12.23% |
American Express |
83.2 |
81.3 |
2.34% |
72.7 |
14.44% |
JPMorgan |
$9.25 |
$9.04 |
2.32% |
9.43 |
-1.91% |
Synchrony |
103 |
101.2 |
1.78% |
92.5 |
11.35% |
Bread Financial |
19.3 |
18.8 |
2.66% |
21.4 |
-9.81% |
Citigroup |
24.2 |
23.8 |
1.68% |
25.1 |
-3.59% |
Bank of America* |
13.9 |
13.6 |
2.21% |
14.1 |
-1.42% |
Total loans |
400.55 |
392.64 |
2.01% |
366.83 |
9.19% |
*Average principal receivables outstanding |