How much lower can they go?

Sequential improvements in delinquency rates in Targets’s credit card portfolio just keep coming as the percentage of accounts 60 and 90 days past due fell yet again in May.

The number of accounts 60 day’s past due dropped to 3.1% in May compared with 3.3% in April while the number of accounts 90 days past represented just 2.3% of the total portfolio in May compared to 2.4% in April.

The steady improvement in the quality of the credit card receivables has resulted in Target generating a higher level of profitability even though the volume of receivables has declined. For example, receivables in the first quarter declined 14.4% to $6.5 billion from $7.5 billion last year, but because a higher percentage of cardholders are honoring their obligations Target is occurring far fewer losses due to write offs. The company’s credit card segment saw operating profits increase by 75% to $194 million as first quarter bad debt expense was virtually non-existent at $12 million compared to $197 million the prior year.