Credit card charge offs fell in February–at most banks
If the economy is getting better, you’d expect defaults and delinquencies on credit cards to be falling, right?
So are they? Is the credit card picture getting better or worse?
It’s an important question for the direction of the economy: You can’t expect consumers to pick u spending if 1) they don’t have jobs, and 2) their houses are worth less than they paid for them, and 3) they’re behind on their credit cards. And consumer spending is about two-thirds of all economic activity in the United States.
Well, the news on credit card debt is exactly the kind of mixed bag that you’d expect at this early stage of a recovery. Read more
Credit card defaults move up again in August
Credit card portfolios at the country’s major banks showed a rising tide of defaults in August. That pretty much wiped out the hope the July’s numbers, which showed a glimmer of improvement marked any bottom in bad loans for the sector.
Consumers. whose spending accounts for about 2/3 of U.S. economic activity, are clearly still in deep trouble.
Among the big three of credit cards, Bank of America (BAC) reported the highest level of write-offs at 14.54%. That’s up from 13.81% in July. Citigroup’s (C) bad credit card loans rose to 12.14% in August, up from 10.3% in July, and JPMorgan (JPM) saw write-0ffs climb to 8.73% in August from 7.92% in July. Read more
Leave home without it: JPMorgan Chase targets American Express
If you’ve wondered what JPMorgan Chase (JPM), one of the winners in the banking crisis, is going to do to savage more damaged competitors, wonder a little less. On September 14, the bank announced it is going after American Express (AXP) and its highly profitable high end card customers.
The effort is called Chase Blueprint and it’s targeted right at those credit card customers who have the income to decide how much of their monthly bill they’ll pay off interest free and how much they’ll turn into a monthly balance.
The key to the effort is a software billing program that will allow the holders of the company’s 152 million cards to decide which monthly purchases to pay off interest free–the traditional American Express card model–and which to finance. Read more
The banking “recovery” is less than it seems from earnings
We’ve got half a banking recovery. That’s not at all the same as being halfway through a banking recovery. What the second quarter results from Goldman Sachs (GS), JP Morgan Chase (JPM), Citigroup (C), and Bank of America (BAC) tell us is that profits from the investment banking side of banking—arranging financing for big company clients—and trading are back big time. But the other side of banking—the bread and butter business of making commercial loans, lending to credit card holders, and the like is still bleeding oceans of red ink.
What we’ve got now is a banking sector rigidly divided into winners and losers. Worryingly for investors inclined to pile into the winners, the profits from the businesses that are thriving right now are way more volatile than those from the stodgier traditional parts of banking. You’ve got to wonder if Goldman and JP Morgan Chase can keep it going and for how long given the normal ups and downs of investment banking and trading. Read more
