Each quarter, Ryan Douglas from the Card Issuing group reports on recent developments for the US consumer credit card sector and compiles key metrics reported by the largest US banks (spend, receivables, loss rates and returns).
- Receivables growth of 5 percent YoY, flat compared to Q1 YoY growth (prior to that, six straight quarters of slowing growth)
- Purchase volume continues to outpace receivables; rewards / high spend cardholders remain in focus for issuers
- For the third straight quarter, Chase, Capital One and Synchrony led all issuers in purchase volume growth (over 10 percent YoY)
- American Express and US Bank led all issuers in receivables growth with YoY increases of over 8.5 percent, followed closely behind by Chase
- Loss rates remained relatively stable and have declined slightly compared to the prior quarter. Banks remain confident in the state of the US consumer, yet late cycle and macro-economic concerns linger. Credit card volume growth continues to outpace receivables with several issuers reporting double-digit growth. Card receivables growth (YoY) was the same as last quarter, a positive sign after six straight quarters of slowing growth.
- Despite ongoing rewards competition, card profitability remains strong
- Banks generally highlight continued strength of US consumer (although investors have concerns regarding the macroeconomic environment outlook)
Apple and Goldman Sachs launch the Apple Card to the general public mid-August; Sonesta Hotels launched new co-brand program with Bank of America; Burlington and Carter’s launched new PLCC programs with ADS; Ethan Allen and TD announced partnership to launch private label program; Interval International launched co-brand card with ADS; FinTech startup, Brex, launched new SMB card with Emigrant Bank; Capital One and James Beard Foundation announced credit card and banking partnership; T-Mobile launched nation-wide checking account in partnership with BankMobile; Klarna announced multiple new partnerships (Expedia, H&M, Abercrombie & Fitch)
Amazon and SYF expanded partnership with new secured “credit builder” PLCC; Chase and Southwest expand business portfolio with new SMB card; Synchrony renewed its sales finance partnership with Suzuki
Amex launched a refresh of its Blue Cash Preferred Card and Gold Card value proposition; Mastercard announced new benefits for its World and World Elite cardholders; card startup, Petal, enhanced cash-back value proposition
Mobile & tech
Facebook announced plan for 2020 launch of new cryptocurrency, Libra; NYC subway launched contactless payments, reported 4x higher adoption than anticipated (1 million+ taps in 3 months, 80 percent smartphone)
Industry statistics (based on non-retail card issuers in scorecard section)
1 Total receivables for all issuers below at end of 2Q19. 2 Total purchase volume of all issuers below in 2Q19, not annualized. 3 After-Tax ROA of issuers that publicly report – Citigroup, Capital One, Synchrony and Discover 4 YoY = Year-over-year change versus 2Q18. 5 QoQ = Quarter-over-quarter change versus 1Q19.
Issuer scorecard ($billions)—Q2 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 Active receivables grew ~11% YoY – the ~2.1% decrease reflects sale/reclassifications to held-for-sale of non-strategic clients.