Magazine article American Banker

Consumer Delinquencies Declined in 4th Quarter

Magazine article American Banker

Consumer Delinquencies Declined in 4th Quarter

Article excerpt

Consumer loan delinquencies at the nation's banks declined during the fourth quarter, spurring guarded optimism that the economy is improving.

Several bankers said they were encouraged by a survey from the American Bankers Association that found a decline in late payments on auto loans, home improvement loans, and five other kinds of installment loans. The delinquency rate fell to 2.58% of total consumer loans on Dec. 31, from 2.74% at the end of the previous quarter.

Improvement Expected

"In 1991, we think, we experienced the most [delinquencies] we are going to see," said Peter Reed, a vice president for consumer lending at First National Bank of Chicago. "We think it's going to get better from now on."

The ABA survey, released quarterly, tracks consumer loan payments that are overdue by 30 days or more as a percentage of total consumer loan payments.

Although the data boosted hopes that the economy may be rebounding -- it was the first time since late 1990 that the delinquency rate stabilized for two consecutive quarters -- payments on bank credit cards deterriorated slightly during the fourth quarter.

Past-due credit card balances stood at 4.61% at the end of December, up from 4.54% three months earlier. Based on the total number of accounts, rather than dollar volume, card delinquencies increased to 3.29%, from 3.19% in quarter that ended in September.

Some bankers shook off the credit card numbers, saying that card delinquencies traditionally rise during the Christmas season when shoppers are spending on new purchases rather than paying off debt. …

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