Credit card metrics for February showed consistent trends, with most companies continuing to normalize at a gradual pace. However, Bread Financial (NYSE:BFH) had higher charge-off and delinquency rates compared to pre-pandemic levels. Baird noted that delinquency and charge-off trends were generally below pre-pandemic levels, while Jeffries reported a 1% monthly decline in receivables due to seasonal factors typically seen at this time of year.
Wolfe Research maintained an underweight stance on card issuers, including Capital One Financial (NYSE:COF), Discover Financial (NYSE:DFS), Synchrony Financial (NYSE:SYF), and Bread Financial (BFH). Delinquency rate formations are expected to continue to rise over the coming months and accelerate later in the year due to last year’s rate hikes driving further slowing, leading to an increase in initial claims.
On the other hand, KBW remains bullish on card issuers and considers these companies highly valuable. The healthy credit quality observed from February’s credit data warrants a premium valuation relative to regional banking space.
To address credit card metrics in February, delinquency rates for Capital One (COF), American Express (NYSE:AXP), JPMorgan (NYSE:JPM), Citi (NYSE:C), and Bank of America (NYSE:BAC) generally remained below the pre-pandemic levels. However, charge-off rates for the same companies remained higher than the pre-pandemic levels. Synchrony Financial’s adjusted charge-off rate only followed the same trend when compared to pre-pandemic levels, while Discover (DFS) and Bread Financial (BFH) had higher charge-off rates compared to pre-pandemic levels.
In conclusion, February’s credit card metrics showed continued normalization at a gradual pace, but higher delinquency and charge-off rates by Bread Financial suggest that the current macro/inflationary environment is affecting non-prime cohorts more acutely than prime cohorts. While some companies had higher charge-off rates compared to pre-pandemic levels, the overall healthy credit quality observed from February’s credit data warrants a bullish position on card issuers.#Credit #card #trends #continue #normalizing #February #nearing #prepandemic #level #NYSEBFH
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