The two segments show two different pictures. While the delinquencies in credit card loans are improving, the opposite is true for commercial and residential real estate.
From yesterday’s release, JP Morgan reported a better 30 Days + delinquency rate of 4.16% in July compared to 4.46% in June. The bank’s default rates also went down to 7.92% from previous month’s 8.04%. Meanwhile, Bank of America also had lower 30+ delinquency rates of 7.58% in July, down 15 basis points. However, net charge-offs remained unchanged from June level at 13.82% and higher than May’s 12.5%. The bank had the highest write-off rate in July among card issuers.
It’s another positive for American Express whose delinquency for the same dropped to 4.2% in July, down 20 basis points from June and 50 bps from May. Its net write-off rate also fell to 9.2% in July, down from 9.9% in June.
Even with default rates showing improvement, Citi’s delinquency was slightly up from 5.49% to 5.51% in June.
That said, reports from the Fed of delinquencies in the real estate market are a bit worrying. A post from CalculatedRisk blog, it says:
Commercial real estate delinquencies (7.91%) are rising rapidly, and are at the highest rate since the early ’90s (as delinquency rates declined following the S&L crisis).
Residential real estate (8.84%) and consumer credit card (6.7%) delinquencies are at the highest levels since the Fed started tracking the data (since Q1 ’91).
Click to enlarge