By Andrew R. Johnson
The six largest credit-card lenders saw further improvements in
borrower behavior in May, even as choppy economic data spark
concerns over the financial state of U.S. consumers.
Capital One Financial Corp. (COF), Discover Financial Services
(DFS) and Bank of America Corp. (BAC) were among the card issuers
posting declines in monthly delinquency rates, which measure the
percentage of loans on which borrowers are behind paying, according
to regulatory filings Friday.
J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C) and
American Express Co. (AXP) also said delinquencies fell from April.
All of the companies except for Discover also reported declines in
their net charge-off rates, or the percentage of loans deemed
uncollectible.
Discover, which has enjoyed among the best credit quality among
its competitors, said the net charge-off rate for loans it packaged
into securities ticked up to 2.65% in May from 2.6% in April. The
rate is still near historic lows, and the increase is "less than
typical seasonal trends" seen during the month, Sanjay Sakhrani, an
analyst with Keefe, Bruyette & Woods, wrote in a research
report.
The credit-card industry has seen ongoing improvements as many
consumers focused on paying down debt following the recession,
allowing lenders to sock away less money to cover future loan
losses.
But recent indicators have renewed worries that consumers could
be in for another tough slog ahead. Earlier this month, a
disappointing U.S. jobs report for May caused a drop in financial
stocks on concerns that a weak employment market could translate
into trouble for borrowers.
Fears that mounting economic problems in European markets will
spread to the U.S. have also weighed on consumer lenders.
Some credit-card lenders have pulled back on marketing, which
surged last year they tried to tried to win new customers.
Banks mailed 260.6 million credit-card offers to U.S. consumers
in April, down from 269.5 million in March and 389.6 million a year
earlier, according to Mintel Comperemedia, a research firm that
tracks direct mailings.
"Issuers have adopted a more cautious approach due to an
uncertain economic environment," Andrew Davidson, senior vice
president for Mintel Comperemedia, said in a press release.
Shares of the largest credit-card lenders were up Friday.
Discover was up 2% at $33.02, American Express was up 1.9% at
$56.07, and Capital One was up 1.7% at $53.90 in recent
trading.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com