Magazine article American Banker

Most Issuers Post Smaller Losses in June; B of A Leads

Magazine article American Banker

Most Issuers Post Smaller Losses in June; B of A Leads

Article excerpt

Byline: Sara Lepro

Credit card losses fell sharply at Bank of America Corp. in June, to the lowest level in more than a year, fresh data showed Thursday. The rate of delinquent loans also declined.

The significant improvement in B of A's chargeoff rate, which has been the highest in the industry, was reflected at nearly all of the six major issuers, according to the companies' monthly filings Thursday with the Securities and Exchange Commission. But B of A's 135 basis-point-drop was the largest among its peers. Bucking the trend, Citigroup Inc. reported a slight increase.

After jumping at the beginning of the year, chargeoffs have generally been on the decline in recent months as consumers continue to pay down debt and banks tighten their underwriting standards.

"Part of the reason we're seeing improving chargeoffs is, the quality of the portfolios [is] stronger than ... a year, a year and a half ago," said Sanjay Sakhrani, an equity analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc. in New York. However, he said he is concerned that balance sheet growth remains anemic.

At B of A, for instance, the total of principal receivables in its credit card trust fell 1.4% during June, to $77.3 billion.

Still, credit trends this spring were better than some analysts had expected.

The annual net chargeoff rate at B of A tumbled in June to 11.98%, its lowest level since April 2009. Chargeoffs at B of A had been trending lower since peaking at 14. …

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