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Overall average credit card delinquencies and net charge-offs rates improved in March compared with February, slightly reversing the trend of gradual steady increases over the past month.
But exclude Bread Financial (NYSE:BFH), which generally has much higher net charge-off rates than its peers, and the net charge-off rate worsened — from an average of 2.46% in February to 2.60% in March. Even excluding BFH, the deliquency rate was relatively stable at 1.96% in March vs. 1.98% in February.
This month, Bread Financial saw both its deliquency and net charge-off rates fall — with the delinquency rate down to 5.7% in March from 6.0% in February and the charge-off rated slideing to 6.7% from 7.8%.
As shown in their Q1 earnings, credit card companies appear to be bracing for some rougher weather ahead, with many increasing their provision for loan losses. Capital One Financial (NYSE:COF) boosted its provision for credit losses to $2.80B in Q1 2023, up from $2.42B in the previous quarter. American Express (NYSE:AXP) increased its PCL to $1.06B from $1.03B in the previous quarter.
Synchrony Financial (NYSE:SYF) boosted its PCL by 7.4% sequentially to $1.29B, driven by higher net charge-offs and a reserve build mainly due to hither loan receivables. Synchrony CFO Brian Wenzel said credit normalization “is tracking in line with our expectations.”
Loan growth, meanwhile, was mixed. Citi’s (NYSE:C) Credit Card Master Trust I saw principal receivables slip to $23.6B from $23.8B during March, while American Express (AXP) U.S. consumer card member loans increased to $71.9B from $70.7B in February. Synchrony (SYF)’s loan receivables at March 31, 2023 rose to $91.1B compared with $90.7B at Feb. 28, 2023.
| 2023 | 2020 | |||||||
| Company | Ticker | Type | March | February | January | 3-month average | March 2020 | Change in bps |
| Capital One | COF | delinquency | 3.66% | 3.72% | 3.65% | 3.68% | 3.69% | -3 |
| charge-off | 4.16% | 4.16% | 3.81% | 4.04% | 5.06% | -90 | ||
| American Express | AXP | delinquency | 1.10% | 1.10% | 1.00% | 1.07% | 1.70% | -60 |
| charge-off | 1.70% | 1.40% | 1.50% | 1.53% | 2.80% | -110 | ||
| JPMorgan | NYSE:JPM | delinquency | 0.88% | 0.88% | 0.83% | 0.86% | 1.16% | -28 |
| charge-off | 1.62% | 1.33% | 1.17% | 1.37% | 2.48% | -86 | ||
| Synchrony | SYF | delinquency | 3.80% | 3.90% | 3.80% | 3.83% | 4.20% | -40 |
| adjusted charge-off | 4.50% | 4.70% | 4.30% | 4.50% | 5.60% | -110 | ||
| Bread Financial | BFH | delinquency | 5.70% | 6.00% | 5.80% | 5.83% | 6.00% | -30 |
| charge-off | 6.70% | 7.80% | 6.70% | 7.07% | 6.90% | -20 | ||
| Citigroup | C | delinquency | 1.17% | 1.12% | 1.04% | 1.11% | 1.56% | -39 |
| charge-off | 1.67% | 1.55% | 1.50% | 1.57% | 3.02% | -135 | ||
| Bank of America | NYSE:BAC | delinquency | 1.15% | 1.14% | 1.09% | 1.13% | 1.58% | -43 |
| charge-off | 1.92% | 1.61% | 1.50% | 1.68% | 2.78% | -86 | ||
| Avg. delinquency | 2.49% | 2.55% | 2.46% | 2.50% | 2.84% | -35 | ||
| Avg. charge-off | 3.18% | 3.22% | 2.93% | 3.11% | 4.09% | -91 | ||
| Avg DQ ex-BFH | 1.96% | 1.98% | 1.63% | 1.95% | 2.32% | -36 | ||
| Avg. NCO ex-BFH | 2.60% | 2.46% | 1.97% | 2.45% | 3.62% | -102 | ||
Note that Discover Financial (NYSE:DFS) doesn’t report its credit metrics for the last month of each quarter. For Q1 2023, the company’s credit card net charge-off rate was 3.10%, up 73 basis points from the prior quarter. The 30+ day delinquency rate for credit card loans was 2.76%, up 23 bps Q/Q.
