Each quarter, Ryan Douglas from the Card Issuing group compiles key metrics on US consumer credit cards, tracking spend, receivables, loss rates and returns reported by the largest US banks.
Credit card volume and receivables continue to grow amongst the top issuing banks for the first quarter of 2019; however, the growth rate of each has been slowing compared to prior years. Loss rates increased slightly YoY, and issuer after-tax returns are strong for those that report. Banks appear optimistic about the economic outlook but expect more moderate growth than 2018.
- Receivables growth, while positive, is slowing (6 percent in Q1 ‘18, 9 percent in ‘17)
- Purchase volume is outpacing receivables growth (although the gap is shrinking) as rewards/high-spend cardholders remain in focus
- Chase, Capital One and Synchrony continue to lead issuers with purchase volume growth of over 8 percent YoY
- Synchrony’s receivables grew 17 percent excluding Walmart (which was moved to held-for-sale), but including PayPal Credit, and ADS continues to move receivables to held-for-sale (non held-for-sale receivables grew 11 percent)
- The credit environment continues to normalize—loss rates increased from Q4 due to seasonality and only slightly increased YoY
- Credit card profitability remains attractive for banks with our ROA proxies increasing 43 bps YoY
- Banks generally point to a strong consumer and stable economy (although investors have “late in the cycle” concerns)
Alliance Data announced new programs with Houzz (PLCC, CB & Biz), Sephora (PLCC & CB), and Burlington (PLCC); Apple and Goldman Sachs announced the “Apple Card” (co-brand to launch in summer 2019); SYF announced a PLCC partnership with Fanatics (launch summer 2019).
American Express renewed the Delta program through 2029; Synchrony renewed Payment Solutions relationships with P.C. Richard & Son, Rheem, and Suzuki; Synchrony moved the Walmart portfolio into held-for-sale; Affirm launched its partnership with Walmart in stores (February 2019), and online (April 2019).
Citi relaunched the Prestige card value proposition and launched the Rewards+ card where all rewards round up to the nearest 10 ThankYou Points; Citi launched two new digital lending products: “Flex Loan” (credit line into personal loan) and “Flex Pay” (after-the-fact financing); Chase announced two new loan products: “Plan” (after-the-fact financing) and “Loan” (credit line into personal loan).
Mobile & tech
Instagram adds “checkout” purchase option in app (processed by PayPal); Chase launches “Secure Banking”, expanding access to underbanked; Kroger introduced “Kroger Pay” mobile solution and a new rewards debit product; Cross River announced a partnership with Stripe enabling “push-to-card” payments.
Stay tuned for next quarter’s report on US consumer credit card trends. For questions or comments, please contact me directly.
Special thanks to Matt Dunn, member of our credit card issuing group, who contributed to this blog.
Industry statistics (based on non-retail card issuers in scorecard section)
1 Total receivables for all issuers below at end of 1Q19. 2 Total purchase volume of all issuers below in 1Q19, not annualized. 3 After-Tax ROA of issuers that publicly report – Citigroup, Capital One, Synchrony and Discover. 4 YoY = Year-over-year change versus 1Q18. 5 QoQ = Quarter-over-quarter change versus 4Q18.
Issuer scorecard ($billions)—Q1 2019
1 Capital One is US consumer and small business credit cards and installment loans. Purchase volume excludes cash advances. 2 American Express: Changed reporting method as of 2Q18; all figures are for US Consumer segment (revolving and charge products) which no longer reports net income. 3 Discover receivables, purchase volume (excludes cash advances), and losses are US domestic card only; ROA includes all of Direct Banking segment (credit card loans represents ~80% of Direct Banking loans). 4 All figures include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for ~70% of total receivables. YoY growth in receivables includes the acquisition of PayPal Credit in 3Q ’18 (+$7.6B) and SYF moved Walmart to held-for-sale in 1Q19. 5 Receivables are average for the quarter. Active receivables grew ~11% YoY – the ~4.9% decrease reflects sale/reclassifications to held-for-sale of non-strategic clients.