Credit Trends Improve in December
December monthly credit data released today showed ongoing credit quality improvement among the six big issuers. The average issuer saw delinquencies improve 11 bp in December, with 4 of the 6 issuers saw delinquencies decline by 10 basis points or more. Citigroup saw the largest sequential decrease in its delinquency rate, falling 17 bp to 3.11% On a 4Q vs. 3Q basis, all issuers improved except for Capital One, which posted a 2 bp increase in delinquencies. On the net charge-off front, the average issuer showed 21 bp of improvement in December with the 4Q vs 3Q improvement coming in at 35 bps, on average. Capital One was the only issuer to have net charge offs rise in 4Q vs. 3Q (by 15 bps).
The improvement in credit quality for the month of December is attributable to two factors. First, there was a significant denominator effect this quarter, the first in a long time. Second, the economy is providing a tailwind as jobless claims have been improving throughout 4Q11. Both of these factors could persist over the intermediate term.
The charts below show our macro team's quantitative levels for the six major issuers.
Joshua Steiner, CFA
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