Fed: Credit Card Banks Report Lower Profits in 2016

Profitability among the nation’s large credit card banks fell slightly in 2016, according to data released by the Federal Reserve today. The Fed defines a credit card bank as an institution that devotes more than 50 percent of its total assets to loans to individuals and, of those, 90 percent or more involve credit cards or related plans.

The return on assets for the 14 credit card banks with assets of more than $200 million fell 4.36 percent in 2015 to 4.05 percent, mostly due to declines in net non-interest income and an increase in loan loss provisions, the report said. While profits edged down, the Fed noted that delinquency and charge-off rates for credit cards were little changed in 2016, remaining well below historical averages. In addition, the data showed that consumers were using less than one-fourth of the total dollar amount of credit available to them.

Total transactions made by cards from the four major card issuers (Visa, Mastercard, American Express and Discover) totaled 34.3 billion, for a total value of $3.1 trillion. Visa and Mastercard combined accounted for nearly 544.5 million credit cards in 2016 (85 percent of all general-purpose cards); American Express and Discover accounted for another 99 million.

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