WRAPUP 1-U.S. card losses improve despite recovery fears

* Credit card delinquencies at lowest this year

* Industry faces concerns about future recovery

* Shares close down at most U.S. card lenders
(Adds expected impact of regulation, updates share prices)

By Maria Aspan

NEW YORK, July 15 (BestGrowthStock) – Fewer Americans fell behind
on credit card payments in June, with delinquencies at their
lowest this year at major U.S. card lenders, but the results
did not stem concerns about the economic recovery.

Credit card delinquency rates have declined steadily since
the beginning of the year, signaling that banks should have to
write off less debt as uncollectable.

But two major lenders, Capital One Financial Corp (COF.N: )
and Citigroup Inc (C.N: ), set off concerns on Thursday that
declines could be coming to an end. If credit quality does not
continue to recover at a steady pace, lenders will be weighed
down by credit losses that are still high by historical
standards.

Delinquency rates, an early warning sign of future losses,
were at their lowest of the year at most lenders, but Capital
One’s delinquency rate barely inched down to 4.79 percent in
June from 4.8 percent in May.

Citigroup’s delinquency rate fell, but its net credit card
losses rose to 11.46 percent in June, from 11.16 percent in
May.

The shares of most major credit card lenders closed
slightly lower on Thursday, with Capital One down the most. Its
shares fell 2.85 percent to $43.26.

The drop in delinquency rates could slow at other lenders
over the summer, said Michael Taiano, an analyst at Sandler
O’Neill.

Consumers usually have a little more money to pay their
bills during the spring because of tax refunds.

But “June’s a little bit of a tricky month, because you get
that effect wearing off. So you could see delinquencies come in
maybe higher than what some people are expecting,” he said.

PREPARING FOR REGULATION

JPMorgan Chase & Co (JPM.N: ) Chief Executive Jamie Dimon
sparked more industry pessimism on Thursday. His bank reported
second-quarter earnings that beat expectations, but Dimon told
investors it was “too early to say” how much more improvement
he could expect in the company’s consumer lending businesses.
[ID:nN13247761]

Credit card lenders are also bracing for a reduction in
their profits after August, when they must implement
restrictions on late fees.

JPMorgan Chase raised more industry alarms about that
regulation on Thursday, when it said it expected to lose about
$750 million of profits because of the late-fee restrictions
and the other parts of the credit card law passed last year.
The bank had previously said it expected the law to cost it
$500 million to $750 million of credit card profits.

Citigroup’s delinquency rate fell to 5.44 percent in June,
its lowest level this year, from 5.59 percent in May.

Capital One’s annualized net charge-off rate for U.S.
credit cards fell to 9.28 percent in June from 9.48 percent in
May. Charge-offs are debts a company believes it will never
collect.

Discover Financial Services (DFS.N: ) said in a regulatory
filing that its credit card delinquency rate fell to 4.81
percent from 4.95 percent in May. Its charge-off rate fell to 8
percent from 8.82 percent.

JPMorgan Chase’s delinquency rates fell to 4.13 percent in
June from 4.22 percent in May. Its charge-off rates for the
month also fell, to 8.38 percent from 8.95 percent.

Bank of America Corp (BAC.N: ) said its accounts more than 30
days past due fell to 6.16 percent in June from 6.39 percent in
May. Its charge-off rates improved more dramatically, to 11.98
percent from 13.33 percent in May.

American Express Co (AXP.N: ), whose credit losses recovered
sooner than those of its competitors, continued to lead the
recovery. Its charge-off rate fell to 5.7 percent in June from
6.3 percent in May. The company’s delinquencies also fell, to
2.7 percent from 2.9 percent.
(Reporting by Maria Aspan, additional reporting by Brenton
Cordeiro in Bangalore; Editing by John Wallace, Andre Grenon
and Steve Orlofsky)

WRAPUP 1-U.S. card losses improve despite recovery fears