Charge-offs among the top ten issuers of VISA and MasterCards increased by nearly 22% during the second quarter of this year compared to second quarter of 2001, driven largely by the rise in sub-prime losses. Providian and Metris/Direct Merchants reported the largest jump in losses, 70% and 38%, respectively. Bank One/First USA and Fleet continued to report decreasing charge-offs over the past twelve months. Discover reported a 26.5% increase in losses for the second quarter compared to the second quarter of last year. For 2Q/02, Discover reported a charge-off rate of 6.30%, compared to 6.49% in the previous quarter, and 4.98% one year ago. For American Express, losses slowed from 6.5% in 1Q/02 to 6.2% in the second quarter. During 2Q/01, American Express experienced a charge-off rate of 5.7%. Among the top ten VISA and MasterCard issuers, the average charge-off rate for the second quarter came in at 7.95%, compared to 6.52% one year ago. If Providian and Metris/Direct Merchants are excluded, the average for the top issuers would be 5.87% for 2Q/02 compared to 5.50% for 2Q/01.
TOP TEN VISA/MC ISSUER CHARGE-OFFS
2Q/02 1Q/02 2Q/01 ANN CHNG
1. Citigroup: 6.50% 6.41% 5.51% +17.9%
2. MBNA 5.09% 5.00% 4.82% +5.6%
3. First USA: 5.62% 5.69% 6.09% - 7.7%
4. Chase: 6.42% 5.87% 5.54% +15.9%
5. Cap One: 4.36% 4.00% 3.98% + 9.5%
6. Providian: 17.53% 15.05% 10.29% +70.4%
7. BofA: 5.59% 5.43% 4.94% +13.2%
8. Household: 7.54% 7.17% 6.82% +10.6%
9. Fleet: 5.81% 5.42% 6.31% - 7.9%
10. Dir Merch: 15.00% 13.00% 10.90% +37.6%
AVERAGE: 7.95% 7.30% 6.52% +21.9%
Source: CardData (www.carddata.com)
