Who are the Top Credit Card Issuers in the U.S.?

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Despite the talk of so-called recovery the real economy is still struggling.U.S. banks are still weighed down by loan losses especially on consumer loans such as credit card loans. While the losses from credit losses are smaller compared to residential or CRE mortgages, they are still significant to monitor for many reasons some of which are discussed below.

As unemployment continues to worsen credit card losses will worsen. Consumers usually first default on credit cards before skipping mortgage or car payments since credit cards are unsecured. In a recent report on the credit card industry Credit Suisse analyst Moshe Orenbuch voiced concern over claims that consumer credit is stabilizing. Moshe said “The combination of continued job losses and increasing bankruptcies means that the improvement in losses is over a year away.’’ A bloomberg article last month also mentioned that credit card defaults are increasing as the unemployment rate is rising.

The three biggest credit card issuers – JPMorgan Chase, Bank of America, Citibank – all reported that consumers fell behind on payments last month. Payments overdue at least 30 days are an indicator future defaults.

“Loans at least 30 days overdue climbed to 4.69 percent from 4.48 percent in August at JPMorgan, and to 7.53 percent from 7.47 percent at Bank of America, the companies said in federal filings. Loans at least 35 days late rose to 5.5 percent from 5.38 percent at Citigroup, according to a separate filing by the New York-based lender.

Discover said late payments increased to 5.57 percent in September, from 5.35 percent the previous month. Capital One, the third-biggest issuer of Visa credit cards, said delinquent loans rose to 5.38 percent from 5.09 percent.”

Charge-off rates in July were:

Bank of America(BOA) = 14.54%

Citibank(C) = 12.14

Discover Financial Services(DFS) = 9.16%

Capital One Financial(COF) = 9.32%

American Express(AXP) reported this week that card defaults and delinquencies did not rise in September. 30-day defaults fell to 4.0% from 4.3% in 2Q,2009. Net charge-offs stood at8.6%. Capital One also reported strong results for 3Q,2009.

However one should not take for granted the profit numbers reported by credit card issuers. These companies can easily do many things which can boost the earnings for a quarter such as offering default consumers one-time payment options to make the loans current.

Household debt rose 115.7% over the past 10 years between 1999-2008. But in 2007-2008 it grew only 0.4%. Credit card loans form a significant portion of households as they were easy to get during the credit bubble periods. Credit card issuers pushed them on everyone from college undergrads to illegals who could pay the monthly minimums.

The Top 10 U.S. Credit Card Issuers by Credit and Debt Outstanding at the end of 2008 (Amount in millions of $) (1):

Top-US-Credit-Card-Issuers

Note:
(1) Credit card loans managed basis includes direct credit card loans to consumers and
securitized loan portfolios that the banks manage. Based on bank regulatory filings with the FDIC
and Federal Reserve.
(2) JPMorgan Chase acquired retail businesses of Washington Mutual.
(3) Wells Fargo & Co. acquired Wachovia Corp.

Source: SourceMedia’s PaymentsSource

It is interesting to see that GE’s GE Money Bank appear in this list. GE is more of a financial services company than an industrial conglomerate nowadays. HSBC North America Holdings is a division of the UK-based HSBC bank(HBC). USAA is a credit union based in Texas that caters mostly to military families.

The September official unemployment rate stood at 9.5%.Most economists estimate that the unemployment rate will exceed 10% some time next year. Already in many states such as Indiana, Michigan the rate is well beyond 10%. Credit card defaults will worsen next year unless the unemployment situation improves.

The Complete List of Chilean ADR Stocks

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Chile-FlagChile is mainly a commodity-based economy.The 2008 GDP per capita was $10,117. Chile is the largest exporter of copper in the world. Besides copper, Chile is also one of the largest exporters of wine.

The main stock market index is “The Selective Stock Price Index” or IPSA.

“The IPSA Index is a Total Return Index and is composed of the 40 stocks with the highest average annual trading volume in the Santiago Stock Exchange (Bolsa de Comercio de Santiago). On the last trading day of the year, the index is re-based back to 1000. The index has been calculated since 1977 and is revised on a quarterly basis.”

Stock Exchange: Bolsa de Comercio de Santiago

The Complete List of ADRs from Chile traded in the U.S. organized exchanges are listed below:

[TABLE=183]

The full List of Chilean ADRs traded in the U.S. NYSE, NASDAQ and OTC markets are listed below:

[TABLE=433]

Note: Some of the ADRs are Unsponsored ADRs.

Back to More Foreign ADRs

Ten Reasons to Invest in Chile

Related ETFs and Closed-End Funds:
iShares MSCI Chile ETF (ECH)
The Chile Fund (CH)

Knowledge is Power: Oil,UK Recession, Shipping Overcapacity Edition

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Oil demand in developed countries likely reached its all-time peak in 2005, according to a new research report by IHS Cambridge Energy Research Associates. Oil Demand Has Peaked in Developed Countries

At a maritime conference in the US recently, a delegate asked Maersk chief financial officer Morten Nicolaisen how the lines could have found themselves in such a catastrophic overcapacity situation.Overcapacity problems even with no recession

A shock 0.4% fall in output for the third quarter revealed today has put the UK economy in the grip of the worst recession since records began… UK economy in longest ever recession

Afghanistan has a fast, efficient, customer-friendly banking system in its network of money traders. They operate where western-style bankers fear to tread – indeed those bankers rely in part on the traders to complete transactions. But the government would like the banks to supersede this old, established system.Afghanistan: Making money in Kabul markets

Prepare for more pain—this recovery is only a blip. Why the recession is here to stay

Historical Perspective: Corporate vs. Government vs. Personal Savings

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The U.S. personal savings rate has been going up since last year and in the second quarter of this year reached nearly 5% of disposable personal income.But how about Government and Corporate Savings?.

The interesting chart below shows historical savings for Corporate,  Government and Personal Saving from 1940 thru 2008:

US-national-gross-saving

Source: (1) Includes individuals (including proprietors and partnerships), nonprofit institutions primarily serving individuals, life insurance carriers and miscellaneous entities.
U.S. Department of Commerce, Bureau of Economic Analysis.

Some take-aways from this chart:

1. Overall gross national saving rose in late 90s primarily due to government savings at all levels

2. Between 2000 and 2008, in most of the years total gross saving fell.

3. From 2002, the government saving fell due to rising personal income tax refunds and government expenditures including many social entitlement programs.

4. In 2008, government spending was $605B more than the revenue received. This increased the public debt. In comparison, this amount was$219B in 2007.

5. Personal Saving rose from $47.8B in 2007 to $192.7B in 2008. But it still well below the $299B reached in 1990.

6. From late 70s, corporate saving has been increasing year after year almost consistently relative to personal saving.Companies like Exoon Mobil (XO), Microfot (MSFT), Dell (DELL) hold billions in cash.

7. The plunge in government saving turned negative during the consumer-driven economic growth since 2000. In 2008,

8.After falling to nearly zero in 2005, personal saving is slowly rising again.