Fitch - US Credit Card Performance Improved

According to the Credit Card Performance Indices that were released by Fitch Ratings today,
credit card charge-offs, the loans lenders believe they cannot collect, dropped from 7.88% in
April, to 7.42% in May, as consumers continue paying off their debt.

In addition to the positive charge-off figures, defaults were reported in the Fitch Ratings as
having dropped by 36% from their high in September 2009. Also, delinquencies of 60 days or
more for credit card asset-backed securities fell from 2.93% to 2.75% in May and early-stage
delinquencies improved to 3.54% from 3.81%.

Fitch leadership said there were two main reasons for the good numbers. “'Charge offs are
diverging from persistently high unemployment and underemployment rates, due partly to tighter
underwriting standards and consumers' efforts to chip away at personal debt pushing down
delinquencies even as unemployment remains persistently high,” said Michael Dean, Fitch
Managing Director.

Dean added, "These positive trends point to further improvements in credit quality measures
and credit card performance as we enter the second half of the year."

Not all the data within the indices were encouraging. The gross yield drew back by 1.81% to
20.09% in May after having gained for two months. Despite this, the gross yield remains about
7% above its 18.7% historical average.

Some believe that the yield will continue to drop. “Yield [is] likely to decrease 2% to 3% in the
coming months as the effects of the discount options continue to abate,” said Senior Director
Cynthia Ullrich.

Fitch's index tracks more than $32 billion of retail or private label credit cards backed by
approximately $53 billion of principal receivables. In total, the index is comprised of the credit
cards of numerous banks and more than 165 retailers including Wal-Mart, Sears, Home Depot,
Federated, Loews, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's.

Follow @CreditDonkey or write to Andrew Green at andrew@creditdonkey.com

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