Underwriting Discipline Continues to Hold Credit Losses at Bay
The second quarter of 2026 brought broad improvement in bank credit card performance, with net credit losses declining across both credit card-focused and diversified banks. Card-focused issuers improved fastest, shedding 21 bps to reach 4.5%, though they still carry roughly 100 bps more loss than their diversified peers. Portfolio balances resumed growth after the seasonal Q1 paydown, but the recovery has been uneven, as diversified banks added balances roughly six times faster than card-focused banks. Returns strengthened for both cohorts, and industry after-tax ROA reached 1.8%, up 69 bps year over year. Management commentary echoed the data, with most large issuers reporting better delinquencies and JPMorgan cutting full-year card charge-off guidance to approximately 3.2%, even as elevated payment rates continue to cap receivables growth.
1. Non-Credit Card Banks Vs Credit Card Banks Key Metric Comparison
(Q1’26 vs. Q2’26 consumer receivables)
2. Market Size and Credit Loss Performance
(Q3’20 vs. Q2’26 consumer receivables)
3. Key Player Performance
(consumer credit card receivables)
4. Management Commentary Echoes Positivity in The Data
General Commentary & Highlights
- Credit quality improved more than expected, with JPMorgan cutting full-year card net charge-off guidance to ~3.2% and most large issuers reporting better delinquencies both YoY and QoQ
- Payment rates, not lack of demand, are constraining portfolio growth – Capital One and Synchrony flagged paydown running above pre-pandemic levels even as spend rose ~6% YoY, leaving card-focused banks at 0.7% QoQ balance growth against 4.0% at diversified banks
- BNPL credit could be moving against the trend of traditional credit – Klarna’s allowance grew 48% in 2025 against 29% receivables growth, lifting its implied loss rate 60 bps to 4.5%
Please do not hesitate to contact Ryan McDonald at Ryan.McDonald@FlagshipAP.com with comments or questions.