Richard Fairbank: So, I think the best way to think about this is to focus on the most stable benchmarks. As our focus here is about stability, so we’re really looking at what are the most stable benchmarks that we can anchor to. And that really leads us back to 2019, 2018. And so let me just sort of speak in that, sort of double-click a little bit into my comments on that. So our delinquencies are above pre-pandemic levels, but they’ve been tracking with normal seasonality for quite some time. And now, compared to 2019, since August we’re running around 17% above the level for the same month of 2019. Compared to 2018, since May, we’re running at around 13% above the level for the same months of 2018. And at this point, we have a pretty good window into January of 2024, as well based on delinquency entries in December and that looks like it’s going to be another month of stability.
So, we feel confident declaring that our delinquencies have stabilized. And of course, delinquencies are our best leading indicator of credit performance. Our charge-offs have been catching up to the stabilizing trend in our delinquencies over the second half of 2023. But at this point, what we’re declaring here is that our charge-offs are leveling off as well. Now, there’s more month-to-month volatility in charge-offs than in delinquencies by quite a bit. Because every data point of delinquencies includes five months of delinquency inventories. And of course, charge-offs is looking at the relatively small number that falls off at the end of the last bucket. And there was also some noise in the fourth quarter of 2019, that makes it less reliable as a charge-off benchmark.
So, we actually think 2018 is an even better benchmark for our charge-offs, for comparing our charge-offs in this fourth quarter that just happened to a past stable year. In the fourth quarter, our net charge-offs were about 15% above 2018 levels. And of course, 2018 rolled into 2019, so that’s an appropriate benchmark to look at as we head into 2024 and compared to 2019. Now when we look ahead, extrapolating from our current delinquency inventories and recent flow rates, we conclude that our net charge-offs are stabilizing at about 15% above 2019, with of course some typical month-to-month volatility and normal seasonality. Now, of course, the seeds of this stabilization have been planted for quite a long time now and partly driven by the choices that we made back in 2020 and 2021.
Coming out the pandemic, we were concerned about two trends. FinTechs were flooding the market, especially the subprime market with credit offers, creating the potential for credit worsening and adverse selection in our originations. We also anticipated that pandemic era stimulus and forbearance would temporarily inflate consumer credit scores and that these would revert over time. So, we tightened our underwriting in anticipation of these effects and we have continued to make adjustments at the margin since then. And the result has been striking, that with all the kind of changes, the normalization, all the noise over the last number of years, that there has been strikingly stable performance on our origination vintages. In our — basically and our post-pandemic originations, each quarterly vintage for a given segment has been more or less on top of each other.
And also, relatively consistent with pre-pandemic vintages. And over time, this just created a lot of stability that increasingly moved into our portfolio and it contributed to the stabilization of our portfolio credit trends. And as we’ve looked at this, we said these are very good shoulders to stand on, to have that much stabilization for so long. We of course all still waited to see exactly the manifestations ultimately of the portfolio stabilizing. Another factor contributing to stabilization is our recovery rate. And unusually low recoveries have been the largest driver of our overall charge-off rate running above pre-pandemic levels. And this is of course because of the very low level of charge-offs over the past three years. And therefore, we had a low level of raw material for future recovery.
And by the way, just a Capital One point here, this is a larger effect for us and for most competitors because we tend to have meaningfully higher recovery rates than the industry average. And because we tend to work our own recoveries, so they come in overtime, not all at once like in a debt sale. And so, we’ve recently observed that our recovery rate has stabilized and started to tick back up. And that’s our — and you know, and now that our recoveries inventory has started to rebuild, that’s of course a good guy, although it’s coming from a pretty low level. And this also contributes to our confidence that our overall loss trends have stabilized. So when you — to your question where you at compared to 2023, what we’ve really done is really kind of anchor our benchmarking to the most stable years in sort of recent experience, 2018 and 2019.
And since we’ve seen delinquencies and charge-offs stabilize relative to like quarters in those benchmarks, we felt the best language with which to describe where things are settling out, is to do it as a multiple of those two generally stable years. And so we are entering 2024 now with a real sense of stability and we’ve benchmarked where we are as a multiple of those two stable year benchmarks.
