DFAST in Credit Cards: No Stress Now; Next Year, Maybe

Credit cards represent the largest risk item in the recently completed banking stress tests mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Potential losses under the hypothetical economic event prescribed in the 2024 tests exceeded $600 billion, $175 billion of which was represented by credit cards. This should prompt strategic moves by credit card program managers and a tightening of standards given the rising tide of charge-offs. 

This Javelin Strategy & Research report explains the stress-testing process, underscores the critical importance of credit card credit quality and the impact it has on overall banking risk under highly challenging economic conditions. Further, it outlines prudential regulatory controls and offers a perspective on how credit card managers can optimize future stress test results.

Key questions discussed in this report: 

• What is DFAST? 
• How did different credit card issuers project losses, and who is best and worst? 
• What can credit card managers do to improve operational performance? 
• Which credit card issuers passed their stress tests? 
• What will 2025 credit losses look like?

Companies Mentioned: 

American Express, Ally Bank, Bank of America, Bank of New York Mellon Corporation, Barclay, BMO, Capital One, Charles Schwab Corporation, Citigroup, Citizens, DB (Deutsche Bank) USA, Discover, FICO, Fiserv, Fifth Third, Goldman Sachs, HSBC, Huntington, JPMorgan Chase, KeyCorp, M&T, Morgan Stanley, Northern Trust Corporation, PNC, RBC USA, Regions, State Street Corporation, Santander, TD Group, Truist, UBS Americas, US Bancorp, Wells Fargo