Credit card loans at U.S. banks rose year over year following five consecutive quarters of decreases, showing an improvement as consumer spending continues to accelerate.
According to data from S&P Global Market Intelligence, credit card loans rose 1.2% year over year during the third quarter, compared to a 2.0% decline in the previous quarter. Lending activity picked up in the third quarter, and several U.S. bankers expressed optimism that loan balances were on the rebound. On the consumer side, strong spending helped deliver an increase in credit card balances.
Goldman Sachs Group Inc. saw total credit card loans spike 97.3% to $6.63 billion. Higher credit card loans and deposit balances year over year were reflected in the company's consumer banking revenues, which were $382 million in the third quarter, according to CFO Stephen Scherr.
"We expect loan growth to accelerate in 2022 given the pending acquisitions of [GreenSky Inc.] and the [General Motors Co.] credit card portfolio and continued expansion in our existing product set," Scherr said during Goldman Sachs' earnings call.
On a call to discuss earnings for the third quarter, Wells Fargo & Co. President and CEO Charles Scharf said consumer credit card spending activity at the company rose 24% compared to 2020 and 18% versus 2019. Travel-related spending still has not fully rebounded to pre-pandemic levels, although it significantly ticked up from the previous year during the week ended Oct. 1, according to the executive.
"Credit card revenue was up 4% from a year ago, driven by increased spending and lower customer accommodations and fee waivers in response to the pandemic," Wells Fargo CFO Michael Santomassimo said, adding later in the call that the company experienced "strong" growth in new credit card accounts, which were up 63% quarter over quarter. Credit card loans at the firm rose only 0.1% year over year to $36.06 billion.
Credit card loans at JPMorgan Chase & Co. increased 1.2% to $127.17 billion. During the company's most recent earnings call, CFO Jeremy Barnum said credit is still "quite healthy," and net charge-offs are the lowest the company has experienced in recent history. Although credit losses and delinquencies remain extraordinarily low, revolving credit card balances will take longer to return to pre-pandemic levels considering liquidity in the system, Barnum added.
U.S. Bancorp is expecting growth on the consumer side in the near term, according to Vice Chairman and CFO Terrance Dolan, who also noted that credit card balances are anticipated to start to strengthen and possibly accelerate as 2022 approaches. The sales volume in the credit card business has been "quite strong" relative to 2019, Dolan said on the bank's earnings call for the third quarter. Credit card loans at the company ticked up 1.1% to $22.14 billion.
At Synchrony Financial, credit card loans slightly grew 0.7% to $75.74 billion. During a call to discuss third-quarter earnings, President and CEO Brian Doubles expressed excitement about the opportunity he sees for Synchrony Mastercard, which lets the company tap into the general-purpose credit card market.
"We are taking a measured approach to growth," Doubles said. "However, by leveraging our scale and underwriting expertise, we've been able to identify better performing customer segments, acquire more customers at lower [costs per acquisition] and fine-tune our channel strategy over the last [two] years."
Some companies still failed to raise credit card loans during the third quarter, including Fifth Third Bancorp, which logged a 16.4% year-over-year drop to $1.74 billion. However, the bank's average total consumer portfolio loans rose 2% given continued strength in the auto portfolio and growth in residential mortgage balances that were partially counterbalanced by declines in home equity and credit card balances, CFO James Leonard said during a third-quarter earnings call.
Citigroup Inc.'s total credit card loans also fell, 0.6% to $139.49 billion, during the third quarter. Still, the company saw some loan growth in cards sequentially with Branded Cards, which offers payment, credit and lending solutions to consumers and small businesses, up about 3% quarter over quarter, CFO Mark Mason said on the company's third-quarter earnings call.
The credit card delinquency rate was flat quarter over quarter but down 62 basis points year over year. In October, most major U.S. credit card issuers saw their master trust portfolio yields grow while loss rates and delinquencies remained near historic lows.
