New TransUnion (NYSE: TRU) data from the just-released Q3 2019
Industry Insights Report point to a few factors that could portend
good things for retailers this holiday season. These dynamics
include a reversal in private label card originations to the
positive side – spurred by lower-risk borrowers – and the ability
of consumers in recent years to pay down more of their holiday
credit card debt. This is all occurring against the backdrop of a
consumer credit market that continues to perform within
expectations.
TransUnion found that private label card originations increased
2.4% to 12.4 million in Q2 2019 (latest data available), marking
the first such year-over-year increase in 11 quarters. Origination
growth is being driven by prime and above consumers, with their
share of new accounts growing faster than non-prime borrowers. The
number of new bank-issued credit cards also rose in Q2 2019,
increasing 5.2% to 16.6 million, the fifth straight quarter of
yearly growth.
As a result of this growth, the number of consumers with access
to revolving credit now stands at a record high 200.5 million
consumers as of Q3 2019, up from 198.0 million in Q3 2018. On
average, bank-issued credit card balances for individuals have
grown to $5,668, while private label average card balances, per
individual, grew to $2,022 in this timeframe.
“Overall, the consumer credit market is performing well, with
delinquency rates declining in the last year for both mortgages and
unsecured personal loans. While serious delinquencies have risen
slightly for auto loans and credit cards, they still remain at
‘normal’ levels,” said Matt Komos, vice president of research and
consulting at TransUnion. “From a credit card perspective, it’s
interesting to see private label card originations grow on a
year-over-year basis for the first time in 2 ½ years. This fact,
combined with low unemployment, high consumer sentiment and recent
strong pay-down activity on credit card balances, indicates that
retailers may be beneficiaries this holiday season.”
TransUnion noted that private label balance activity and
originations have been consistently higher during recent holiday
shopping seasons, designated as the months of November and
December. For instance, department stores saw the number of new
private label credit cards increase to a monthly average of 1.25
million during the holidays compared to a non-holiday monthly
average of 0.76 million, representing a holiday season increase of
65%. When observing private label card origination growth for all
categories, including clothing, discount, furniture and jewelry
stores, activity increased by 42% during the 2018 holiday season –
similar to what was observed in 2016.
The report also found that consumers have been consistently
increasing the balances of their private label and general purpose
credit cards during the last three holiday seasons, and they’ve
been paying them down at higher rates. In the 2018 holiday shopping
season, consumers added $31.9 billion in bankcard balances, and
they paid down 92% of those balances in the first quarter of 2019.
This marks a trend of slightly lower holiday balances for all
credit cards, though with increased pay downs the following
quarter. For private label cards, pay-down activity in the last two
years has improved greatly because the mix of originations and
balances have been more weighted to prime and above consumers.
Lower risk consumers often do not utilize as much of their
available credit.
Charging Up Credit Cards in November and
December; Paying Them Down in the New Year
Year |
Q4 Bankcard Balance Growth |
Percent of Bankcard Debt Paid Down
in the Following Quarter (Q1) |
Q4 Private Label Balance Growth
|
Percent of Private Label Debt Paid Down in the Following
Quarter (Q1) |
2018/2019 |
$31.9 billion |
92% |
$6.6 billion |
102% |
2017/2018 |
$32.6 billion |
84% |
$6.3 billion |
94% |
2016/2017 |
$33.3 billion |
72% |
$8.5 billion |
30% |
“It’s critical to point out that while consumers continue to
make holiday purchases with their credit cards, they are paying off
most of these balances within the next few months. While some
observers may point to lower card balance growth as a sign that
consumers may be slowing down, it’s also important to note that
some of them may be leveraging newer products such as point-of-sale
financing, which has taken off in just the last few years. What’s
most important is that consumers are leveraging many credit
instruments that often provide them with the best terms, and they
are paying off a large portion of these debts while mostly
remaining in good standing on these accounts,” concluded Komos.
TransUnion’s Q3 2019 Industry Insights Report features insights
on consumer credit trends around personal loans, auto loans, credit
cards and mortgage loans. For more information on these trends,
please register for this quarter’s webinar.
Retail Revival: Private Label Reverses Declining
Trend
Q3 2019 IIR Credit Card SummaryFollowing 10
straight quarters of negative growth, private label originations in
Q2 2019 grew for the first time since Q3 2016 at a rate of 2.4%
year-over-year. The resurgence in private label was predominately
driven by the prime and above risk tiers as issuers focus on lower
risk. The credit card market continues to exhibit significant
growth, with originations increasing 5.2% YOY. Card balances have
increased YOY consecutively for 26 quarters, reaching a high of
$807 billion and an average balance per consumer of $5,668.
Meanwhile, the average new account credit line decreased 2.0%
year-over-year to $5,284, compared to $5,390 in Q3 2018.
Instant Analysis“As the credit card market
continues to grow, delinquencies remained largely in check and came
in under forecast at 1.81% 90+ DPD, compared to the projected 1.86%
for bankcards. On the private label side we have also seen a recent
expansion across the market. The origination trend reversal
combined with balance growth is an indicator of continued consumer
confidence in their current and future financial standing heading
into the holiday shopping season.”
° Paul Siegfried, senior
vice president and credit card business leader at
TransUnion.
Q3 2019 Credit Card Trends
Credit Card Lending
Metric |
Q3 2019 |
Q3 2018 |
Q3 2017 |
Q3 2016 |
Number of Credit Cards |
439.9 million |
425.1 million |
414.3 million |
398.5 million |
Borrower-Level Delinquency Rate (90+ DPD) |
1.81% |
1.71% |
1.68% |
1.53% |
Average Debt Per Borrower |
$5,668 |
$5,580 |
$5,483 |
$5,323 |
Prior Quarter Originations* |
16.6 million |
15.8 million |
15.5 million |
17.6 million |
Average New Account Credit Lines* |
$5,284 |
$5,390 |
$5,307 |
$5,252 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Steady Growth Continues for the Consumer Lending
Market Q3 2019 IIR Personal Loan
SummaryTotal unsecured balances in Q3 2019 increased to a
record high of $156 billion. The average balance per consumer also
continued to rise, growing 7.9% year-over-year to reach $8,998 in
Q3 2019. While balances continue to grow, performance remains solid
as delinquencies (60+DPD) declined to 3.28% in Q3 2019 from 3.41%
over the same period last year. While growth has remained robust,
originations for unsecured personal loans slowed to a YOY growth
rate of 8.2% in Q2 2019, compared to 23.0% over the same period
last year. The majority of YOY origination growth occurred in the
super prime (17.2%) and prime plus (12.0%) risk tiers.
Instant Analysis “The consumer lending market
has maintained healthy growth. Delinquencies continue to decline
while balances are growing, which is a great combination.
Throughout 2018 the consumer lending market experienced
unprecedented double-digit origination growth, but this year we
have seen the growth slow to a more sustainable high single digit
growth rate. Current growth rates and performance markers are a
good indication of the expected market behavior through the rest of
the year and into 2020.”
° Liz Pagel, senior vice
president and consumer lending business leader at
TransUnion
Q3 2019 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q3 2019 |
Q3 2018 |
Q3 2017 |
Q3 2016 |
Total Balances |
$156 billion |
$132 billion |
$112 billion |
$100 billion |
Number of Unsecured Personal Loans |
22.5 million |
20.3 million |
17.5 million |
16.2 million |
Number of Consumers with Unsecured Personal
Loans |
20.2 million |
18.5 million |
16.4 million |
15.3 million |
Borrower-Level Delinquency Rate (60+DPD) |
3.28% |
3.41% |
3.13% |
3.53% |
Average Debt Per Borrower |
$8,998 |
$8,338 |
$8,017 |
$7,755 |
Prior Quarter Originations* |
4.8 million |
4.5 million |
3.6 million |
3.6 million |
Average Balance of New Unsecured Personal
Loans* |
$6,382 |
$6,253 |
$6,140 |
$5,475 |
*Note: Originations are viewed one quarter in arrears to
account for reporting lag.
New Vehicle Sales Slow but Performance Remains
Steady Q3 2019 IIR Auto Loan SummaryThe
serious auto loan delinquency rate (60+DPD) remained steady at
1.40%, the ninth straight quarter year-over-year with a delinquency
variation of less than 10 basis points. Total balance growth,
though, slowed to 3.5% YOY in Q3 2019, compared to the 5.2% yearly
increase observed in Q3 2018.Total YOY origination growth remained
flat in Q2 2019 at approximately 7.3 million, with growth contained
to the prime plus (3.0%) and super prime (5.2%) risk tiers.
Subprime, near prime and prime all saw YOY declines for the first
time since a six-quarter pullback that lasted from Q3 2016 to Q4
2017.
Instant Analysis “As affordability pressures
such as rising new vehicle prices, plateauing terms and looming
tariffs weigh on the auto industry, forecasts predict that 2019 new
vehicle sales will likely fall below 17 million for the first time
since 2014. Additionally, used vehicle sales may also be impacted
and fall flat for the first time since 2014. Yet steady
delinquencies and flat year-over-year originations in the face of
falling vehicle sales still point to the current underlying health
of the auto loan market.”
° Satyan Merchant, senior
vice president and automotive business leader at
TransUnion
Q3 2019 Auto Loan Trends
Auto Lending Metric |
Q3 2019 |
Q3 2018 |
Q3 2017 |
Q3 2016 |
Number of Auto Loans |
83.4 million |
81.9 million |
78.6 million |
74.8 million |
Borrower-Level Delinquency Rate (60+
DPD) |
1.40% |
1.36% |
1.40% |
1.33% |
Average Debt Per
Borrower |
$19,145 |
$18,835 |
$18,567 |
$18,361 |
Prior Quarter
Originations* |
7.3 million |
7.3 million |
7.1 million |
7.3 million |
Average Balance of New Auto
Loans* |
$21,953 |
$20,998 |
$20,653 |
$20,436 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Super Prime Refinancing Spurs Mortgage Origination
Growth Q3 2019 IIR Mortgage Loan
SummaryMortgage performance continues to stay strong as
delinquencies remain near record lows. Year-over-year consumer
delinquencies (60+DPD) decreased from 1.65% in Q3 2018 to 1.51% in
Q3 2019. Q2 2019 originations grew 12% YOY to 2.1M. Average new
account balances also grew during this period at 10% YOY.
Instant Analysis “It’s noteworthy that many of
the more expensive MSAs experienced significant year-over-year
origination growth in Q2. Of the top 20 MSAs, those with an average
new account balance greater than $300K experienced origination
growth of 20% year-over-year, while those MSAs with an average new
account balance less than $300K experienced origination growth of
only 13% year-over-year. Looking forward we expect refinance
activity to drive origination growth, riding the availability of
low interest rates.”
° Joe Mellman, senior vice
president and mortgage business leader at TransUnion
Q3 2019 Mortgage Loan Trends
Mortgage Lending
Metric |
Q3 2019 |
Q3 2018 |
Q3 2017 |
Q3 2016 |
Number of Mortgage
Loans |
53.6 million |
53.1 million |
52.7 million |
52.3 million |
Borrower-Level Delinquency Rate (60+
DPD) |
1.51% |
1.65% |
1.91% |
2.29% |
Average Debt Per Borrower |
$210,457 |
$205,782 |
$199,417 |
$193,489 |
Prior Quarter
Originations* |
2.1 million |
1.9 million |
1.9 million |
2.0 million |
Prior Quarter Average Balance of New
Mortgage Loans* |
$253,150 |
$230,076 |
$224,502 |
$230,120 |
*Note: Originations are viewed one quarter in arrears to
account for reporting lag.
For more information about TransUnion’s Q3 2019 Industry
Insights Report, please register for this quarter’s webinar.
About TransUnion (NYSE: TRU)Information is a
powerful thing. At TransUnion, we realize that. We are dedicated to
finding innovative ways information can be used to help individuals
make better and smarter decisions. We help uncover unique stories,
trends and insights behind each data point, using historical
information as well as alternative data sources. This allows a
variety of markets and businesses to better manage risk and
consumers to better manage their credit, personal information and
identity. Today, TransUnion has a global presence in more than 30
countries and a leading presence in several international markets
across North America, Africa, Europe, Latin America and Asia.
Through the power of information, TransUnion is working to build
stronger economies and families and safer communities
worldwide.
We call this Information for Good.®
http://www.transunion.com/business
Contact |
Dave Blumberg |
|
TransUnion |
|
|
E-mail |
david.blumberg@transunion.com |
|
|
Telephone |
312-972-6646 |
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/544bcf58-e085-4872-88b0-cf655b8f1bd0
TransUnion (NYSE:TRU)
Historical Stock Chart
From Mar 2024 to Apr 2024
TransUnion (NYSE:TRU)
Historical Stock Chart
From Apr 2023 to Apr 2024