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Credit cards a bright spot for BofA

Daniel Ray

If you follow business news, you’ve likely already heard about Bank of America’s first-quarter performance, which includes a 77 percent drop in income and adding $3.30 billion to loan loss reserve.

Its credit card portfolio, however, looked like one of the brighter spots in a down quarter. Delinquencies and charge-offs were up, but not shockingly so. Some highlights:

Debit card purchase volume increased 15 percent.
“Both card income and service charges increased 14 percent helping generate a 30 percent increase in noninterest income.”
The provision for credit losses increased by $4.04 billion to $6.45 billion compared with a year ago, but most of that was due to “additions for home equity reflecting the impacts of housing weakness and the slowing economy, as well as seasoning of the consumer portfolios and deterioration in the small business portfolio.”

On consumer credit cards, delinquencies of 30 or more days rose from 5.32 percent a year ago to 5.61 percent (net figure, including the impact of debt securitization). Delinquencies of 90 days or more rose from 2.79 percent a year ago to 2.83 percent. The quarterly figures are volatile, and while the trend is definitely up, the size of the jumps are nothing out of the ordinary. See page 15 of the supplemental report if you want more details on the bank’s credit card default rates.

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