We track master trust loan data from primary credit card issuers, which combined account for roughly 30% of revolving credit outstanding. We monitor American Express, Capital One, Discover Financial, Citigroup, Bank of America, JPMorgan Chase, Alliance Data Systems, and several retailer and private-label issuers. Overall, we find the credit card trust data for the industry to be generally in line with our expectations considering seasonality. Credit trends remain near all-time lows and are likely to remain there for 2013, but further improvement is likely nearing an end. Payment rates remain near record highs.
Credit card issuers have been increasingly using deposits instead of securitization debt to fund loans. Consequently, some trust metrics, such as receivable growth, are not reflective of the broader industry. Industry receivables continue to exhibit tepid growth, while meaningful improvement in credit metrics has mostly dissipated, we believe. American Express and Discover continue to hold the best credit metrics of the seven issuers we track. We believe that while credit quality is likely to soften somewhat from its record-low levels, it could remain at strong levels for an extended period, barring a sharp reversal in the macro economy, as a result of the overall improved financial health of the consumer and relatively tight credit standards.
We anticipate 1%-3% industry credit card loan growth in 2013, up from 0.4% in 2012, as consumer deleveraging is likely near an end. Total charge-offs fell 18 basis points month-over-month, to 3.23%. Seasonality is a tailwind, generally from the beginning of the year to around midyear. The 18-basispoint drop compares with the average May-to-April drop of 20 basis points since 2010.
Only two of the seven issuers reported sequential increases (Alliance Data and Discover). Discover’s May loss rate of 1.95% is the lowest of the group, followed by American Express at 2.08%. The average charge-off rate is 74 basis points below a year earlier. The May mean rolling-three-month charge-off rate fell 5 basis points from the prior month, to 3.32%, which is 76 basis points below the May 2012 rate.