Each quarter, Ryan Douglas compiles key metrics on US consumer credit cards, tracking spend, receivables, loss rates and returns reported by the largest US banks.
US consumers are showing an increased preference for credit cards. Banks reported robust growth in purchase volume over the past quarter, along with solid growth in receivables and benign loss rates. Read more about the key themes and notable happenings below.
- Banks reported favorable credit trends in the past quarter as purchase volume and receivables continued to grow, and loss rates remained benign.
- Credit card purchase volume increased at a significant pace over the past year, led by Capital One, American Express and Chase.
- Receivables also grew at a healthy rate, most notably at American Express, Capital One and Discover.
- New products and product refreshes were prevalent in Q2. Many of these new products are offering high-value incentives to open/activate.
- Investments in digital capabilities are evident across the industry with new all-digital products (e.g., Chase’s Finn), and full-service functionality in digital channels.
- Bank of America and Chase reported notable declines in card originations in the past quarter (nearly 10 percent YoY).
- Issuers pointed to rewards (and associated cost) as a basis of differentiation, but there was a general theme of rational competition in most respects.
Citibank completed $1.5B acquisition of L.L. Bean credit card portfolio from Barclays; Synchrony and PayPal finalized transfer of $7.6B in receivables; Signet Jewelers closed last phase of credit outsourcing, selling its non-prime portfolio to CarVal Investors and Castlelake.
Alliance Data and IKEA introduced new co-brand offering 5 percent rewards on IKEA purchases; American Express announced new partnership with Amazon to offer a small business co-brand credit card; Wells Fargo launched no-fee Wells Fargo Propel American Express card.
In July, Walmart announced its intent to partner with Capital One and end its Synchrony relationship; Citibank renewed its card partnership with Sears, paying $425 million up front in a highly customized structure; Alliance Data and Victoria’s Secret renewed their PLCC partnership.
American Express launched its no-fee, 1.5 percent cash back Cash Magnet card; Citi and American Airlines introduced new no-fee AAdvantage MileUp card, offering 2 miles per dollar; Chase and Hyatt introduced $95 annual fee World of Hyatt Card; Chase and Marriott introduced $95 fee Marriott Rewards Premier Plus card; Chase and Southwest Airlines introduced $149 annual fee Southwest Airlines Priority Card; Synchrony and Belk will introduce a co-brand credit card.
Mobile & tech
Chase announces a partnership with Tock, a high-end dining program.
Stay tuned for next quarter’s report on US consumer credit card trends.
Industry trends (based on non-retail card issuers in scorecard section)
1 Total receivables for non-retail issuers at end of 2Q18. 2 Total purchase volume of non-retail issuers in 2Q18. 3 After-tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit-specific income. 4 YoY = Year-over-year change versus 2Q17. 5 QoQ = Quarter-over-quarter change versus 1Q18. Note: Purchase Volume is reported volume for the quarter (it is not annualized or TTM)
Issuer scorecard—Q2 2018 ($ in billions)
1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citigroup: Purchase volume includes cash advances. Citigroup data includes Citi-Branded Cards and Citi Retail Services. 3 Capital One: US card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume and net loss rates are for US consumer cards. 5 Discover: includes US domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied US Cards tax rate of ~22%. ROA denominator estimated from total loans ended figures. 6 American Express: Changed reporting method as of 2Q18. All figures except ROA are for US Consumer segment; Amex has stopped reporting net income attributable to US consumer segment. ROA is estimated based on US receivables comprising 88% of Global Consumer segment and 22% US effective tax rate. 7 US Bank: Net Income attributable to Payments Services totaled $361M as of 2Q18, compared to $282M in 2Q17; Payments Services includes revenue from consumer credit cards, as well as commercial revenue and other sources. 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.