Around 28% of US and Canadian bank risk professionals expect the credit card delinquencies to rise in the next six months, according to a survey from FICO conducted by the Professional Risk Managers’ International Association (PRMIA).
According to the survey, about 34% of respondents also expected delinquencies on auto loans to grow.
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While 58% respondents expected average balances on credit cards to rise, 9% bankers expected them to go down.
Additionally, 44% of bankers expected the consumer credit amount to increase, while 14% expected that it will decrease in the next six months.
FICO Labs head and FICO chief analytics officer, Dr Andrew Jennings, said while the delinquency predictions in their survey are not alarming, lenders will be keeping a close eye on these trends.
"Banks are walking a fine line – trying to grow their lending portfolios without taking excessive risks. But given that credit card delinquencies are near their lowest level since the Fed began tracking them in the 1990s, a small uptick is to be expected and shouldn’t spook lenders. A slight increase in delinquencies is normal when availability of credit expands and borrowing increases," Jennings added.
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