Credit card delinquency rates fell last month at most major U.S. lenders, with the exception of Citigroup Inc, in the latest sign that Americans are starting to climb out of the recession.

On the downside, credit losses from uncollectable loans were still high, and worsened for JPMorgan Chase & Co, Capital One Financial Corp, Citigroup and American Express Co, according to regulatory filings by the companies on Thursday. And credit losses for many lenders were up from a year earlier.

But delinquencies are a better gauge of future loan performance, and with fewer consumers late on their bills, the outlook for credit losses over the summer may be improving.

We're at that inflection point where credit losses have either peaked or start peaking, so they should start to trend down, but the question is how quickly they come down. The jury's still out, said Michael Taiano, analyst at Sandler O'Neill.

But credit cards are short-term loans for the most part, so they tend to churn through the bad ones pretty quickly once delinquencies stop growing, he said.

JPMorgan reinforced the card industry's hopes on Wednesday when it reported robust first-quarter earnings and modified its previously gloomy outlook on credit cards. The bank said it had trimmed the loss expectations for its card business and cut the unit's reserve for loan losses.

Analysts had expected seasonal factors, including tax season, to improve delinquency rates. More consumers have cash on hand from tax refunds and can put that money toward paying down debt.

But an improving economy is likely part of the story too. Retail sales jumped in March, and businesses boosted inventories in February at the highest rate since July 2008, signaling they are seeing higher demand. Economic reports on Thursday pointed to a relatively slow-paced economic recovery.

SURPASSING EXPECTATIONS

Despite the increase in charge-off rates at some issuers, analysts called them better than expected.

Given that we were expecting charge-offs at the high-end of the range, these results are a positive, Richard Shane, an analyst at Jefferies & Co, wrote in a note Thursday afternoon.

American Express continued to exhibit some of the most improved credit trends, as its delinquencies decreased from 3.6 percent over the previous two months to 3.3 percent in March. Its charge-offs increased slightly, from 7.4 percent in February to 7.5 percent in March, but remained among the lowest in the sector.

On the other end of the spectrum, Citigroup was alone in reporting increases in both delinquencies and charge-offs. Its charge-off rate increased to 11.55 percent in March, from 11.29 percent in February. Delinquencies also increased, to 6.06 percent in March from 5.94 in February.

Bank of America Corp said in a regulatory filing Thursday that its credit card charge-off rate -- the rate at which it writes off loans as uncollectable -- fell in March by almost a full percentage point from February, to 12.54 percent. Delinquencies fell to 7.07 percent from 7.23 percent.

Delinquencies at Discover Financial Services continued to inch down, from 5.5 percent in February to 5.39 percent in March. Its charge-off rate, which rose from 8.58 percent in January to 9.11 percent in February, fell to 8.51 percent in March.

JPMorgan said its charge-off rate increased to 9.51 percent in March from 9.21 percent in February. But its delinquency rate continued to decline, from 4.75 percent in January and 4.67 percent in February to 4.51 percent in March.

Capital One charge-offs rose to 10.87 percent in March from 10.19 percent in February. But its accounts at least 30 days delinquent declined to 5.3 percent from 5.51 percent.

Despite the increases in charge-offs at some companies, the worst is probably behind them in terms of credit deterioration, Taiano said.

You could see any month tick up here or there, but I don't think it's going to be a general trend where you see charge-off rates continue to go up.

Shares of Discover, American Express, Bank of America and JPMorgan Chase all closed higher.

Capital One and Citigroup, which reported its monthly card data later than usual on Thursday were two of the weakest bank stocks. Shares of Capital One closed down 1.98 percent at $45.15, while shares of Citigroup closed down 2.43 percent at $4.81.

(Reporting by Maria Aspan; editing by John Wallace and Matthew Lewis)

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