Magazine article American Banker

Past-Due Consumer Loans Drop to a Nine-Year Low

Magazine article American Banker

Past-Due Consumer Loans Drop to a Nine-Year Low

Article excerpt

WASHINGTON -- The percentage of delinquent consumer loans fell 25 basis points in the second quarter, to 2.06%, the lowest level in nine years, the American Bankers Association said Wednesday.

The June 30 results marked the fifth consecutive quarterly decline in the index. In June 1992, delinquencies stood at 2.60%.

A |Debt-reducing Diet'

"Consumers have been on this debt-reducing diet," said ABA chief economist Jim Chessen.

"Consumers are now in a better position to purchase goods and services," he added.

Mr. Chessen added that chargeoffs of loans al banks helped improve the numbers.

Paul Kasriel, an economist at Northern Trust Co. in Chicago, said the data should result in more loan activity.

"These delinquencies are going down because employment is going up," he said. "This is going to increase banks' willingness to extend credit."

Credit Surge

Total consumer installment credit increased, at a seasonally adjusted annual rate of 8.1% in July, the ABA also noted.

The $5.1 billion rise, to $751 billion, was the largest one-month advance since October 1989. The largest gain was in revolving credit, which jumped 12.8% or $2.8 billion.

But Mr. Chessen said that everything isn't coming up roses.

Personal income has been "bouncing around" rather than making any sure progress, he said. He agreed with Mr. Kasriel that job creation is encouraging, but he still thinks "we're going to have slow growth for a considerable period of time. …

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