FROM SCRATCH NEWSWIRE

SCAVENGING THE INTERNET

CREDIT CARD DELINQUENCIES UP, REPORT SAYS (USA)

Posted by Gilmour Poincaree on December 16, 2008

Monday, December 15, 2008 – 10:15 AM CST

Birmingham Business Journal

PUBLISHED BY ‘THE BIRMINGHAM BUSINESS JOURNAL’ (Philippines)

A growing number of Americans are falling behind on their credit card bills. The latest Fitch Retail Credit Card Index shows 60-day delinquencies have increased by nearly 24 percent since August, to 4.8 percent.

Fitch expects charge-offs – debts deemed uncollectible – to exceed 12 percent in the first half of 2009, up from current levels of about 9 percent.

Despite the bleak forecast, the Fitch index indicates retail credit card portfolios remain healthy because higher interest rates charged to cardholders continue to stay ahead of the charge-offs experienced by the card issuers. Ratings are not expected to be downgraded any time soon.

Fitch’s Retail Credit Card index tracks more than $72 billion in principal receivables backing approximately $40 billion in retail or private-label credit. The largest issuers in the index are Citibank Omni Master Trust and GE Private Label Master Trust.

Fitch Ratings is a global credit ratings firm based in New York.

CAPITAL ONE TAKES $505M IN WRITE-OFFS

Capital One Financial Corp., which earlier this month agreed to buy Chevy Chase Bank and its troubled loan portfolio, has some portfolio troubles of its own.

McLean, Va.-based Capital One disclosed in a Securities and Exchange Commission filing Dec. 12 that it charged off $403 million worth of credit card loans and $102 million worth of auto loans in November.

At the end of November, Capital One still had $69.8 billion in credit card loans on its books, but 4.7 percent of them are at least 30 days delinquent. Some $21.7 billion worth of auto loans were on the books at the end of November, with 9.5 percent of them more than 30 days overdue.

International loans are a smaller portion of Capital One’s portfolio. They, too, are showing weakness. Capital One wrote off $39.7 million worth of international loans in November, leaving $8.9 billion on the books. 5.4 percent of those loans were more than 30 days delinquent.

On Dec. 4, Capital One (NYSE:COF) agreed to acquire Washington, D.C.-area neighbor Chevy Chase Bank, and its $15.5 billion in assets, for $445 million in cash and 2.56 million Capital One shares. Capital One said it would take a credit charge of $1.75 billion for potential losses in Chevy Chase’s troubled loan portfolio.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE BIRMINGHAM BUSINESS JOURNAL’ (Philippines)

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