Nomura Securities on U.S. Cards: October Consumer Data and Seasonality

Nomura Securities on U.S. Cards: October Consumer Data and Seasonality by Brian Foran

Foran said, "The recent increase in headline card delinquency is due to seasonality, not a turn in the US consumer. In fact, delinquency is improving on a seasonally-adjusted basis. Long growth was still muted, down 0.4% in October, where there is no material seasonality, so what you see is what you get. We continue to rate CapitalOne (NYSE: COF) and Discover (NYSE: DFS) Buy: At DFS, loan growth has been a little disappointing but credit quality continues to beat expectations, and CD repricing and revenue suppression tailwinds remain. At CapOne, seasonality is always more pronounced than the industry and thus the delinquency increase over the past few months doesn’t concern us."

"Continue to rate COF and DFS Buy: At DFS, loan growth has been a little disappointing but credit quality continues to beat expectations, and CD re-pricing and revenue suppression tailwinds remain. At CapOne, seasonality is always more pronounced than the industry and thus the delinquency increase over the past few months doesn’t concern us – it is in-line to slightly better than COF’s own seasonality. We continue to see value with both stocks trading at ~7x 2012F earnings."

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