For the fourth straight month in a row, the rate of credit card delinquencies saw a dip in the month of April as well. Despite these positive changes in the industry, financial analysts believe that it will take time for the banks and other financial institutions to emerge from the financial losses they incurred during the recession period.
Six major credit card lenders in the United States saw the lowest default rate of the year in April. The only bank among these six that reported an increase in the write-offs was Bank of America which was the only exception.
The most recent results are beyond the expectations of the banks and the financial experts. However, industry professionals are still apprehensive and predict that the write-offs and default rates will still continue to remain high because of the 10% unemployment rate prevailing in the job sector.
Some analysts are also concerned about the revenue prospects for the industry considering the huge losses incurred by the financial institutions during recession and also the new credit card regulations that were proposed to amend card fees.
RCB Capital Markets analyst, Jason Arnold, said "Charge-offs are going to come down much more slowly than they went up", adding that these were signs of very slow recovery in the financial market.
Vendors at Orlando's Expo in Florida and Card Forum, in addition to analysts and bankers, did not want to read much into the changing default rates which have always seen a decline in the early part of every year because this is when customers get their tax refunds.
The Chief Operating Officer of Barclay's card in the United States, Joe Purzycki, said that their bank would not consider it to be a consistent trend until the unemployment rate begins to show a fall. On Monday, in Orlando, attending an interview, he said "You'd think growth would mean more jobs, people back to work, and we'd be able to worry less about our loss picture. But we're not at that point yet."
Gains were posted by Bank of America and American Express shares posted gains propelled by the data that revealed positive signs of change.
The shares of American Express rose by 1.43% on Monday and stood at $41.22 and the shares of Bank of America rose by 1 cent to close at $16.35.
The other banks whose shares saw an increase were Citigroup, Discover Financial Services, Capital One Financial Services and JPMorgan Chase & Co.