As growth in the credit card industry has stalled nationally, a group of small issuers have kept their foot on the gas.
Credit available on payment cards slipped another $9 billion in the third quarter to $2.8 trillion, according to
The expansion by small issuers comes as some of the biggest lenders continue to reengineer their businesses after being sideswiped during the recession, and amid weakness in indicators of consumer demand. The New York Fed said that credit inquiries — one such indicator — fell for the third consecutive quarter.
Many small lenders have the advantage of being unburdened by the task of jettisoning lower credit-quality segments.
Some have been
At SunTrust, card loans and unused lines both grew at an annual rate of more than 20% in the third quarter, lifting the company to about $3 billion in total lines. “That’s off of a very low base,” Aleem Gillani, the company’s chief financial officer, told investors in November. But “I think we can get very strong double-digit percentage growth for the next several years.”
U.S. Bancorp (USB) has also
Across the country, total lines have now declined for three quarters in a row after a shallow rebound that began in the first quarter of 2010. Total lines were
While total lines fell at Bank of America (BAC) and Citigroup (NYSE:C) in the third quarter, other members of the Big Six did show growth.
Both loans and unused lines increased at American Express (AXP), extending a streak that began in the second quarter of 2011. At Discover (DFS), loans grew while unused lines shrank; overall, lines edged up at an annual rate of 1%.
David Nelms, Discover’s chief executive, said in November that the company will continue to pursue “transactor sales,” referring to higher-end customers who tend to ring up large volumes of purchases on their cards relative to the amount they borrow, and therefore generate large amounts of interchange fees.
Overall, however, “consumers and banks alike got religion, and they’re not going to forget that crisis anytime soon,” Nelms said. “The industry’s still shrinking. I expect it will get back to even and maybe go up a little bit, but I don’t see our industry really growing faster than the” economy as a whole “over the coming years.”