JPM - Credit card delinquency net charge-off rates start to normalize in August

Overall, credit card delinquency rates ticked up in August from July, and most issuers in the table below also saw net-charge-off rates increase, signs that credit metrics may be heading to more normal patterns. During the pandemic, consumers mostly kept current on credit card payments with the help of the government's stimulus checks and enhanced unemployment benefits,  keeping credit metrics unusually strong for the past 17 months. But during that time, individuals have been borrowing less. So banks' profits from their consumer lending businesses have suffered. That's starting to reverse, too. Loan balances increased M/M for four straight months across Capital One (COF +1.0%), Discover Financial (DFS +1.2%) and Synchrony Financial (SYF +1.6%), the three credit card companies that Wolfe Research analyst Bill Carcache follows. The credit quality normalization is expected to occur gradually. The delinquency trends suggest that net charge-offs are unlikely to rise meaningfully until mid-2022, he said.

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Credit card delinquency, net charge-off rates start to normalize in August