The second biggest lender of credit cards in the US, Bank of America Corp. said that loans which were overdue fell in the previous month to their lowest in more than a year. This has signaled a decrease in the number of write offs in the future after the record losses faced in the previous year. The number of payments of bills on credit cards late by at least a month fell to 7.07% in the month of March, which has been the lowest percentage since the December of 2008, compared to 7.23% in the previous month. The write offs of loans that cannot be collected accounted only for 12.54% dropping from 13.51% in the month of February. This is also a 10 month low figure.
At 5 of the 6 big card issuers the delinquencies have decreased, including JP Morgan Chase and Co. and American Express Co. which are No. 1 and 2. These results have been in sync with the comments of the chief executive officer of JP Morgan, Jamie Dimon who said that a broad based rebound in the economic situation has given a boost to the bank earnings. The average estimate of around 20 analysts suggests that Bank of America might report a first quarter profit of about 1.2 billion dollars with 10 cents per share earnings. Meanwhile Charlotte, which is a company based in North Carolina and is the card services unit of Bank of America, posted a 5.56 billion dollar loss in 2009 due to a peaking of the write-offs.
JP Morgan reported a first quarter income of 3.33 billion dollars while the card services posted a 303 million dollar loss after initial estimates pegged the losses at a billion dollars in the first half of this year. Citigroup Inc. remained the only card issuer amongst the top 6 to show a considerable increase in both the number of write offs as well as delinquencies. Even the late payments climbed in March to 6.06% which is its highest over the last 4 years. At 11.55 percent even the write-offs were quote large although in August of last year they peaked to 12.14%.
On the other hand, the Riverwoods, Illinois based Discover Financial Services saw a decline in the number of write offs. The usual period of write-offs for banks is usually half a year. JP Morgan too witnessed a decline to 4.51 percent, a 7 month low for the delinquencies.