Rising credit card delinquencies to add to U.S. banks' worries

Rising credit card delinquencies to add to U.S. banks' worries
From Reuters - September 15, 2017

(Reuters) - U.S. banks, already under pressure from slower loan growth and low interest rates, could be facing yet another challenge as a rising number of Americans fall behind on their credit card payments.

Several large U.S. banks and credit card companies, including Capital One Financial Corp (COF.N) and JPMorgan Chase & Co (JPM.N), reported a rise in credit card delinquency rates for August, the second consecutive rise after falling for four months.

While the rates remain significantly below the levels hit during the 2008-2009 financial crisis, rising delinquencies could result in higher loan losses for lenders.

A noticeable rise in delinquency rates - even from very low levels - is worth paying attention to, said Andrew Haughwout, senior vice president at the New York Federal Reserve.

JPMorgans credit card delinquencies rose 1.16 percent in August from 1.15 percent in July, while Capital One reported a delinquency rate of 3.97 percent, up from 3.81 percent in July.

Discover Financial Services (DFS.N) monthly credit card delinquency rate rose to 2.1 percent in August versus 2 percent in July.

Overall, seasonally-adjusted credit card delinquency rates for U.S. banks rose to 2.47 percent in the second quarter from 2.20 percent a year earlier, according to New York Fed data.

Delinquency rates surged during the financial crisis as the economy crumpled and thousands of people lost their jobs. In the aftermath of the crisis, lenders tightened their standards to curb losses from non-performing loans.


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