JPMorgan Chase, Bank of America Corp., Capital One Financial Corp. and Discover Financial Services reported Monday that their credit card delinquencies and net charge-off rate fell in May from April.
American Express Co. said its delinquency rate was flat at 1.1% in May while its net charge-off rate declined to 1.9% from 2.1% in April.
The results were disclosed in monthly filings with the Securities and Exchange Commission.
The overall decline in late credit card payments continues a steady performance that has been bolstered by signs that the U.S. economic recovery is gradually gaining traction. Low delinquency rates have helped banks boost their earnings by releasing funds set aside to cover future losses, known as loan reserves. While industry executives repeatedly have predicted the period of declining losses would end, it has yet to occur, and lenders continue to enjoy the financial benefits of consumers post-crisis discipline.
Historically, during what analysts believe to be a "normal" economic environment, major credit card lenders see delinquency and loss rates between 3% and 5%. Many card executives last year said they expected improvements in loan quality to wane because there was little room for more improvement. The fact that rates remain below that range for many issuers means they will likely be able to continue releasing reserves in the coming quarters, according to Donald Fandetti, an analyst with Citigroup Inc.
The size of many lenders card portfolios has shrunk in the past two years with borrowers reluctant to carry large balances from month to month. Instead, many consumers have opted to pay down their balances. The exception has been Discover and American Express, which have outpaced the industry in terms of loan growth. Both say they have seized market share from other issuers, which has helped increase their loan portfolios.
Other highlights from the filings:
Capital Ones delinquency rate for U.S. card loans was 2.97% in May, down from 3.14% in April. Its net charge-off rate fell to 4.17% from 4.61%.
Discovers delinquency rate fell to 1.6% from 1.7%, while its net charge-off rate fell to 2.2% from 2.3%.
Bank of America reported its delinquency rate for securitized card loans declined to 2.6% from 2.72%, and its net charge-off rate fell to 4.03% from 4.55%.
The delinquency rate for J.P. Morgans securitized card loans fell to 1.6% in May from 1.7% in the previous month. Its net charge-off rate fell to 3.34% from 3.49%.