WRAPUP 2-U.S. credit card losses fall more than expected

* Major U.S. credit card lenders’ charge-off rates fall

* Lowest default levels this year as Americans pay debts

* Delinquencies fall, beating some analysts’ expectations

* Shares close mixed
(Adds American Express data, analysts’ comments; updates share

By Maria Aspan

NEW YORK, Aug 16 (BestGrowthStock) – Fewer Americans fell behind on
their credit card payments in July, major U.S. credit card
lenders said, bringing delinquencies to their lowest levels so
far this year.

Lenders including American Express Co (AXP.N: ), JPMorgan
Chase & Co (JPM.N: ) and Bank of America Corp (BAC.N: ) said they
also wrote off fewer bad loans in July. The news was better
than some analysts had expected, and shares of some major
credit card lenders edged higher, while others drifted lower as
the broader market fell.

“Seasonally, delinquencies do tend to get a little worse in
the second half of the year … so these numbers were
definitely better than we were looking for,” Credit Suisse
analyst Moshe Orenbuch said.

Credit quality usually worsens slightly once consumers stop
getting tax refunds around mid-year, because they have less
extra money to pay off their debt.

If delinquencies continue to decline despite the seasonal
drag, credit card lenders could report lower-than-expected loss
rates in the current quarter, Orenbuch said.

Delinquencies, an early warning sign of future losses, have
fallen at most lenders since the start of the year. The July
decline suggests that U.S. customers are managing their debt
despite an uncertain economic recovery and high unemployment.

“It’s a positive sign,” said Michael Taiano, an analyst at
Sandler O’Neill.

But he cautioned that the consumer credit recovery was
still incomplete: “Generally things have stabilized and begun
to improve, but does it mean that the consumer’s raring to go
and go back and spend again? I don’t think so.”

Charge-offs, or loans written off as uncollectable, also
fell across the board. Credit card losses at JPMorgan Chase and
Capital One Financial Corp (COF.N: ) fell to about 8 percent, a
big improvement from the over-10 percent rates they posted as
recently as January.

American Express, Discover Financial Services (DFS.N: ) and
Bank of America also reported July charge-off rates that fell
to their lowest this year.

American Express lends directly to consumers, like other
credit card banks. It also processes the transactions for its
own cards, and it competes with Visa and MasterCard to process
the transactions on other banks’ cards.


Credit card losses remain high, especially at Bank of
America, which continues to report some of the highest
charge-off and delinquency rates of the major U.S. credit card

But the company’s credit card delinquencies fell to their
lowest levels this year, of 5.92 percent, from 6.16 percent in
June. Bank of America’s charge-offs also fell to a new low of
11.39 percent of the portfolio, annualized, from 11.98 percent
in June.

At the other end of the spectrum, American Express
continued to recover faster than other large credit card
lenders. The company said delinquencies fell to 2.6 percent in
July, from 2.7 percent in June and 3.6 percent in January.
Charge-offs fell to 5.5 percent from 5.7 percent in June.

JPMorgan Chase said in a regulatory filing on Monday that
its delinquencies fell to 4.06 percent in July from 4.13
percent in June. Charge-offs dropped to 7.95 percent from 8.38

Discover’s credit card delinquencies fell to 4.72 percent
in July from 4.81 percent. Charge-offs at the credit card
lender and processing network also fell to a new low this year
of 7.28 percent from 8 percent in June.

Capital One’s U.S. credit card charge-offs continued to
decline for the fourth straight month, to 8.13 percent in July
from 9.28 percent in June. Its accounts at least 30 days
delinquent declined to 4.66 percent from 4.79 percent.

Citigroup Inc (C.N: ) is expected to report the monthly
performance of its credit card portfolio on Monday.

Shares of JPMorgan Chase and Capital One closed slightly
higher on Monday, Discover ended unchanged, and Bank of America
and American Express fell less than 1 percent.
(Reporting by Maria Aspan in New York; Additional reporting by
Brenton Cordeiro in Bangalore; Editing by Robert MacMillan and
Richard Chang)

WRAPUP 2-U.S. credit card losses fall more than expected