Net Charge-Off Rate

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Dictionary Says

Definition of 'Net Charge-Off Rate'

The dollar amount representing the difference between gross charge-offs and any subsequent recoveries of delinquent debt. The net charge-off is often a percentage representing that amount of debt that a company believes it will never collect compared to average receivables. Debt that is unlikely to be recovered is often written off and classified as gross charge-offs. If, at a later debt, some money is recovered on the debt, the amount is subtracted from the gross charge-offs to compute the net charge-off value.
Investopedia Says

Investopedia explains 'Net Charge-Off Rate'

Bad debt or poor credit quality loans are regularly charged off as bad debt and purged from the books, often on a monthly or quarterly basis. If and when part of the debt is repaid, the net charge-off can be calculated by finding the difference the gross charge-offs and the repaid debt. A negative value for net charge-offs indicates that recoveries are greater than charge-offs during a particular.

For example, if a bank lends $1 million in one year but only expects to get back $900,000, then the gross charge-off is $100,000. If the bank recovered $25,000 from the year before, it is added to the gross charge-off to get a net charge off of $75,000. The net charge-off rate is based on statists identifying what debt is likely to become default. A credit card company, for example, may post a 10.31% net charge off rate, meaning that, for the specified period, the company expects that 10.31% of its debt will never be recovered.
Search results for

'Net Charge-Off Rate'

  • Capital One Profits Surge

    http://stocks.investopedia.com/stock-analysis/2011/Capital-One-Profits-Surge-COF-C-JPM-WFC-BAC0715.aspx
    ... Earnings per share increased to $1.97 from $1.33 in the same period. The net charge
    off rate was 2.91%, down dramatically from the year ago figure of 5.35%. ...

  • JPMorgan Chase Less Risky Below Book Value

    http://stocks.investopedia.com/stock-analysis/2010/JPMorgan-Chase-Less-Risky-Below-Book-Value-JPM-GS-MS-FII-LM1014.aspx
    ... for credit losses. In the credit card division, the net charge-off rate fell
    to the single digits at 8.87%. Last year's third quarter ...

  • JPMorgan Chase Returns To 2006

    http://stocks.investopedia.com/stock-analysis/2011/JPMorgan-Chase-Returns-To-2006-JPM-GS-MS-AXP-BAC0117.aspx
    ... The credit card group continued to struggle and saw sales fall 18% to $4.2 billion,
    though the net charge off rate continued to fall and decreased to 7.08%. ...

  • Capital One Under Pressure

    http://stocks.investopedia.com/stock-analysis/2009/Capital-One-Under-Pressure-COF-WFC-USB0619.aspx
    ... At the end of May 2009, Capital One reported annualized net charge-off rate on US
    credit cards of 9.41% - a number widely reported in the media. ...

  • JPMorgan's Drop In Book Value An Invitation To Investors?

    http://stocks.investopedia.com/stock-analysis/2009/JPMorgans-Drop-In-Book-Value-An-Invitation-To-Investors-JPM0120.aspx
    ... of write-downs of mortgage assets and "additional reserving action" in business
    units such as credit cards, which saw the net charge-off rate rise to 5.56 ...

  • Is Citi Too Big To Succeed?

    http://stocks.investopedia.com/stock-analysis/2009/Is-Citi-Too-Big-To-Succeed-C-JPM-BAC-WFC-COF1023.aspx
    ... One Financial (NYSE: COF), has seen its delinquencies continue to rise, with its
    annual net charge-off rate rising last month to 9.77% from 9.32% in August. ...

  • Will The Real Conn's Please Stand Up

    http://stocks.investopedia.com/stock-analysis/2009/Will-The-Real-Conns-Please-Stand-Up-CONNHGGBBYCHRSRSHADS0911.aspx
    ... to $1.40-1.60, from $1.75-1.85, set aside $2.7 million in bad debt reserves (up
    from $300,000 year-over-year) and indicated its net charge-off rate for its ...

  • Discerning JPMorgan's Normalized Earnings Potential

    http://stocks.investopedia.com/stock-analysis/2010/Discerning-JPMorgans-Normalized-Earnings-Potential--JPM-BAC-C-GS-MS0125.aspx
    ... services and card services continued to reel from hefty credit loss provisions,
    even as net interest margins grew ... The managed charge-off rate jumped to 9.33 ...

  • Busting The Debt Myth

    http://stocks.investopedia.com/stock-analysis/2008/Busting_The_Debt_Myth_AXP_DFS_COF.aspx
    ... While the average industry charge-off rate of roughly 4 ... spending and further increases
    in charge-off rates as ... with its perceived higher net-worth clientèle and ...

  • Discover Reserves An Earnings Miss

    http://stocks.investopedia.com/stock-analysis/2010/Discover-Reserves-An-Earnings-Miss-DFS-COF-AXP-JPM-C-BAC0318.aspx
    ... a drop to 5.5% from 5.55%, though its charge-off rate rose ... Its delinquency rate is
    at 7.23% and its charge-offs are ... to the $104 million loss in net income, or ...

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