WASHINGTON—On the surface, credit card portfolios are performing well, but “peel back the onion” and there are some potential problems, according to one analyst.
Overall, numbers from the Federal Reserve show card charge-offs stand at 3.65%, a figure 11 basis points higher than Q2 2017, but one BP better than the prior quarter.
“To see the issue, you need to peel back the onion. Large banks are doing very well and drive the number with their portfolios,” stated the Payments Journal.
Charge-off performance at the top 100 banks ended the second quarter of 2018 at 3.56%, but for those not in the top 100, the metric is a whopping 7.78%.
“Simply put, write-offs at small credit card issuing firms is twice that of large issuers,” Payments Journal said.
Large banks are running at 2.41% for 60+ delinquency; smaller banks are almost three times higher at 6.15%.
“It is likely to expect the large bank delinquencies to surge around 2Q19 when you consider the most recent trend in U.S. consumer debt reported by the Fed,” the Payments Journal said.