U.S. Credit Card Issuers: Stable Outlook for 2025 but Being Mindful of the Consumer

This commentary reviews the outlook of Credit Card Issuers in 2025.

Key highlights include:
-- While credit performance metrics have deteriorated past pre-pandemic levels, the underlying fundamentals point to stabilizing and potentially improving performance over the coming quarters.

-- We expect credit card spending for 2025 to remain healthy but with growth remaining closer to the current mid-single digit levels.

-- The credit card balance growth rate is likely to moderate further converging with the expected growth rate for credit card spending.

-- We expect NIMs for card issuers to modestly compress, but moderating credit related provisioning should benefit earnings.

"Morningstar DBRS anticipates a stable operating outlook for U.S. credit card issuers in 2025, which should remain supportive of our current credit ratings." said Yanni Koulouriotis, CFA, Vice President - North American Financial Institution Ratings, "This outlook is underpinned by our expectation for solid economic growth in 2025, including healthy labor markets. While there is clearly stress at lower income households, U.S. consumers remain mostly resilient but are being more cautious following the cumulative effects of higher interest rates and inflation."