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Financials Overview: Week of September 11–15, 2017

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Financials Overview: Week of September 11–15, 2017 PART 1 OF 3

Are Rising Credit Card Delinquencies a Concern?

US banks’ trading revenue could fall in 3Q17

US investment banks (XLF) could witness another weak quarter. Their trading revenues could fall 15%–20% year-over-year. In 3Q17, the fixed income and equity trading revenues for Citigroup (C) and Bank of America Merrill Lynch (BAC) will likely fall ~15% YoY. Meanwhile, JPMorgan Chase (JPM) expects its trading revenues to fall ~20%. Goldman Sachs (GS) said that the environment to boost trading revenues remained challenging. Another weak quarter could delay the recovery in banking sector revenues this year. After a strong first quarter, banks’ trading revenues remained subdued in the second quarter.

Are Rising Credit Card Delinquencies a Concern?

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Rising credit card delinquencies

Several large US banks and credit card companies, including Capital One Financial (COF), Discover Financial Serviecs (DFS), and JPMorgan Chase, reported a rise in credit card delinquency rates for August—the second consecutive rise after falling for four months. According to New York Fed data, seasonally-adjusted credit card delinquency rates for US banks rose to 2.5% in 2Q17 from 2.20% the previous year.

JPMorgan Chase’s credit card delinquencies rose 1.16% in August from 1.15% in July. Capital One reported a delinquency rate of 3.97%—up from 3.8% in July. Discover Financial Services’ (DFS) monthly credit card delinquency rate rose to 2.1% in August—compared to 2% in July. While the delinquency rate remains significantly below the levels during the 2008-2009 financial crisis, rising delinquencies could result in higher loan losses for many lenders.

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