WRAPUP 3-U.S. card delinquencies fall as outlook improves

* Credit-card delinquencies fall at U.S. lenders

* Fewer late payments indicate economic recovery ahead

* Lenders still struggle with high losses, lack of growth

* Shares rise; JPMorgan, Capital One and Discover up most
(Adds Citigroup; updates shares to close)

By Maria Aspan

NEW YORK, Nov 15 (BestGrowthStock) – Major U.S. credit-card lenders
reported lower delinquency rates on Monday, as fewer Americans
fell behind on payments, in another sign that the economic
recovery is gaining momentum.

Lenders including Bank of America Corp (BAC.N: ), Citigroup
Inc (C.N: ) and American Express Co (AXP.N: ) said the rate of late
payments on their credit cards fell in October to the lowest
level this year.

Delinquencies are the first sign that consumers are having
trouble paying their bills and indicators of future losses. The
steady decline this year at the top U.S. credit-card lenders
signals that American consumers have recovered from the worst
of the financial crisis.

“It’s nice to see that consumers feel more confident in at
least being able to pay their other bills,” RBC Capital Markets
analyst Jason Arnold said, adding that the October delinquency
rates were slightly better than he had expected.

“We still have a very slow recovery ahead of us, but it’s
encouraging to see the seasonal trends being overwhelmed by
credit performance,” he said.

Credit quality usually worsens in the second half of the
year, as consumers stop using tax refunds to pay down debt and
start shopping for the holidays.

The U.S. Commerce Department provided more positive
evidence for the economy on Monday when it reported that sales
at U.S. retailers rose more than expected in October.
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THE LONG ROAD BACK

But uncertainty remains, as persistently high unemployment
slows the rate of recovery at consumer lenders. Overall
charge-off rates have fallen at most banks but remain high by
historical standards. Loan portfolios are still shrinking, with
consumers reluctant to take on new debt.

Bank of America, for example, said in a regulatory filing
on Monday that its charge-off rate inched back up above 10
percent in October, after falling to 9.99 percent in
September.

Bank of America, the largest U.S. consumer bank, still has
the nation’s worst credit-card loss rate, but it has dropped
from more than 13 percent at the beginning of 2010. The
company’s delinquency rate in October fell to 5.60 percent from
5.71 percent.

Lenders file monthly credit-card performance reports with
the U.S. Securities and Exchange Commission.

Citigroup said charge-offs rose to 10.27 percent in
October, from 8.99 percent, largely due to a one-time
accounting change. But its delinquency rate fell to 4.74
percent in October from 4.93 percent in September.

At the other end of the spectrum, American Express
continued to report the lowest level of charge-offs and
delinquencies among the major U.S. lenders. The credit-card
lender and transaction processing network said charge-offs was
unchanged at 4.7 percent in October. Delinquencies fell to 2.3
percent from 2.5 percent in September.

Like Discover Financial Services (DFS.N: ), American Express
lends directly to consumers and competes with Visa Inc (V.N: )
and MasterCard Inc (MA.N: ) to process credit-card transactions.
The company is increasingly looking to its
transaction-processing business for growth, and has cut back on
lending to all but affluent consumers who mostly pay their
bills in full every month.

JPMorgan Chase & Co (JPM.N: ), which is increasingly
competing with American Express for the most affluent credit
card customers, said in a separate filing on Monday that its
charge-off rate fell to 7.0 percent in October, from 7.78
percent in September.

The bank’s delinquency rate was unchanged at 3.81 percent
the second-lowest at the top U.S. lenders.

Discover’s charge-off rate fell to 6.83 percent in October,
from 7.15 percent in September. The company said its
delinquency rate fell to 4.34 percent in October, from 4.41
percent in September.

Capital One Financial Corp (COF.N: ) said charge-offs fell
sharply in October, to 7.26 percent from 8.38 percent in
September. The bank has reduced its loss rate from more than 10
percent at the beginning of the year.

But Capital One’s delinquency rate only improved slightly,
falling to 4.45 percent from 4.53 a month earlier.
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Shares of Bank of America closed slightly down on Monday,
while those of the other five rose. JPMorgan, Capital One and
Discover all closed up more than 1 percent.
(Reporting by Maria Aspan; Editing by Maureen Bavdek and Steve
Orlofsky)

WRAPUP 3-U.S. card delinquencies fall as outlook improves