Q1 2020: US credit card issuer snapshot

Key themes

• In Q1 2020, the impacts of COVID-19 on issuer earnings were still relatively mild in terms of portfolio growth and losses. However, reserves spiked based on expected future losses, putting significant pressure on earnings.
•  YoY growth in receivables for Q1 2020 was modest at 1.9%, and below the 4% YoY growth seen in Q4 2019. Similarly, purchase volume growth YoY was 2.6%, but is far below the 7.1% YoY growth in Q4 2019.
• ADS had the most significant decline in spend among all issuers likely due to its high weighting in PLCC cards and mall-based retail; Synchrony and Citi Retail experienced similar results.
•  Loss rates increased both YoY and QoQ for most issuers, but only modestly as the impact of COVID-19 on losses will lag until Q2 and/or Q3.
•  Issuer profitability declined sharply across the board due to the large reserve builds for future losses expected due to the pandemic, as well as CECL requirements.

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Notable happenings

New partnerships
State Farm announced a partnership with U.S. Bank to outsource its deposit and co-brand credit card accounts; Klarna announced a number of new US retail partners including Good American and Planet Blue; SoFi announced a new partnership with Mastercard to launch a suite of debit and credit card products; Afterpay announced a partnership with Marqeta to issue/market Afterpay product offerings.

Partnership developments
Chase renewed/extended its co-brand credit card relationship with United Airlines until 2029; Alliance Data renewed its long-term co-brand partnership with Caesars Entertainment; Synchrony announced it extended and renewed several key relationships (specific partners were not disclosed).

New products/features
Delta and American Express relaunched the Delta SkyMiles portfolio with enhanced value propositions and benefits; Chase added benefits to its Sapphire Reserve product (namely through new partnerships with Lyft and DoorDash) but at a higher annual fee of $550; Chase and United Airlines announced the launch of a new SMB co-brand card.

Mobile & tech
Revolut launched its Financial Super App and debit card in the US; Capital One launched new features for its chatbot functionality, including fraud and transaction alerts; Ally Financial launched new tools to help customers boost savings.

Industry statistics (based on non-retail card issuers in scorecard section)

¹ Total receivables for all issuers below at end of 1Q20. ² Total purchase volume of all issuers below in 1Q20, not annualized. ³ After-Tax ROA of issuers that publicly report – Citigroup, Capital One, Synchrony, Discover and ADS. ⁴ YoY = Year-over-year change versus 1Q19. ⁵ QoQ = Quarter-over-quarter change versus 4Q19.

Issuer scorecard ($billions)—Q1 2020

¹ Capital One is US consumer and small business credit cards and installment loans. Purchase volume excludes cash advances. ² American Express changed its reporting method as of 2Q18; all figures are for US Consumer segment (revolving and charge products) which no longer reports net income. ³ Discover receivables, purchase volume (excludes cash advances), and losses are US domestic card only; ROA includes all of Direct Banking segment (credit card loans represents ~80% of Direct Banking loans). ⁴ All figures include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for ~70% of total receivables. ⁵ Average receivables of $18.3B (does not include loans held for sale). ⁶Credit card specific unless otherwise noted. ⁷Consumer Bank. ⁸Global Consumer Services. ⁹Community Bank.

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