Credit card delinquency rates continued to slowly climb toward prepandemic levels in September, according the the average of seven banks monitored by Seeking Alpha. The average rate of 2.13% rose from 2.05% in August and from 1.89% in July.
For some perspective, though, the average delinquency rate was 2.83% in September 2019, before COVID-19 prompted massive fiscal relief programs that led to the ultra-strong credit measures since then.
The biggest month-over-month jump in delinquency occurred at Bread Financial (NYSE:BFH), which saw a 40 basis point increase to 5.7%, followed by Capital One (NYSE:COF), which saw a 21 bp boost, and Synchrony Financial (NYSE:SYF), with a 20 bp increase.
The average net charge-off rate, though, took a breather from increasing in September. That average rate of 2.09% slipped from 2.13% August, but still was higher than 2.02% in July. By comparison, the average net charge-off level three years earlier was 3.43%.
The biggest increase in net charge-offs for the month, was Capital One (COF), with a 21 bp rise to 2.23%. Meanwhile, charge-off rates fell at three of the banks in the list, with Bread Financial (BFH) seeing its NCO fall 30 bps and Synchrony (SYF) registering a 10 bp dip.
Looking back to 2019, Bread Financial’s (BFH) credit metrics are the closest to its prepandemic level. Delinquency rate of 5.7% in September 2022 compares with 5.9% three years earlier. NCO rate of 5.0% compares with 5.3% in 2019.
| 2022 | ||||||
| Company | Ticker | Type | September | August | July | 3-month average |
| Capital One | COF | delinquency | 2.97% | 2.76% | 2.56% | 2.66% |
| charge-off | 2.23% | 2.02% | 2.36% | 2.19% | ||
| American Express | NYSE:AXP | delinquency | 0.90% | 0.80% | 0.70% | 0.75% |
| charge-off | 0.80% | 0.80% | 0.80% | 0.80% | ||
| JPMorgan | NYSE:JPM | delinquency | 0.69% | 0.66% | 0.66% | 0.66% |
| charge-off | 1.15% | 1.15% | 1.02% | 1.09% | ||
| Synchrony | SYF | delinquency | 3.30% | 3.10% | 2.90% | 3.00% |
| adjusted charge-off | 3.00% | 3.10% | 3.00% | 3.05% | ||
| Bread Financial | BFH | delinquency | 5.70% | 5.30% | 4.80% | 5.05% |
| charge-off | 5.00% | 5.30% | 4.50% | 4.90% | ||
| Citigroup | NYSE:C | delinquency | 0.85% | 0.82% | 0.79% | 0.81% |
| charge-off | 1.12% | 1.33% | 1.19% | 1.26% | ||
| Bank of America | NYSE:BAC | delinquency | 0.92% | 0.88% | 0.85% | 0.87% |
| charge-off | 1.31% | 1.24% | 1.27% | 1.26% | ||
| Avg. delinquency | 2.19% | 2.05% | 1.89% | 2.08% | ||
| Avg. charge-off | 2.09% | 2.13% | 2.02% | 2.04% | ||
Note that Discover Financial (DFS) doesn’t report monthly credit metrics for the last month of each quarter. For Q3, the company reported credit card delinquency rate of 2.11%, up 35 basis points from the prior quarter, and its net charge-off rate of 1.92% fell 9 basis points from the prior quarter.
Earlier in the month, SA contributor Seeking Profits put a Conviction Buy on Capital One (COF), saying consumer credit fears are overblown