I found the top 10 credit card earnings bullets worth reading...especially note American Express...
cardweb.com
2001 proved to be either a really good or bad year for the nation's ten largest issuers, who control 75% of the market. Here is a rundown on how each one fared.
1 CITIBANK
Citigroup reported profits for its North America Cards unit were up 21% for the fourth quarter and 19% for the full year. While receivables rose 2% last year to $108.9 billion, Citi's charge volume grew a weak 1%. For the fourth quarter, charge volume declined slightly from $56.8 billion for 4Q/00 to $56.7 billion for fourth quarter 2001. Citi is also dealing with significantly higher charge-offs and delinquency than 2000. Charge-offs hit 5.91% for 4Q/01, compared to 5.48% in the third quarter, and 4.22% one year ago. Delinquency (90+ day) was 1.98% for the fourth quarter 2001, compared to 1.82% for 3Q/01, and 1.46% for 4Q/00. As of Dec 31, Citi had 92.9 million credit card accounts in North America, excluding Diners Club. Outside of North America, Citigroup had 15.2 million credit card accounts generating $10.3 billion in sales volume and $13.6 billion in receivables during the fourth quarter.
#2 MBNA
MBNA weathered a tough economic fourth quarter with strong earnings and solid account growth, in the face of lower than expected non-interest income and rising delinquency and charge-offs. During the fourth quarter, MBNA signed up 2.8 million new customers representing 2.4 million new accounts. Delinquency hit 5.09% compared to approximately 4.94% one year ago, and charge-offs hit 4.86% for 4Q/01 compared to 3.87% for 4Q/00. Card volume for the fourth quarter was up 12.4% over 4Q/00, logging in at $39,201,482,000. MBNA's net income for the quarter was $524.8 million compared with $423.8 million for 4Q/00. Total managed loans at Dec 31, were $97.5 billion, a $4.9 billion increase over the third quarter. MBNA signed 110 new affinity contracts during the quarter and renewed 300 deals. MBNA also reported that its Web site now serves more than 5.6 million customers and they have signed up 900,000 new customers via the Internet last year.
#3 FIRST USA
First USA reported a 70% increase in fourth quarter operating income of $326 million, driven by higher net interest income, lower expenses, and the addition of the Wachovia credit card business last year. The pre-tax return on outstandings was 3.10% in the fourth quarter, up from 2.64% in the prior quarter. End-of-period managed loans were $68.2 billion, up $1.2 billion from 4Q/00. First USA opened 1.0 million new accounts during the quarter, a 22% increase from the year-ago quarter and down 13% from the third quarter. At Dec 31, 55.6 million cards were issued. The managed charge-off rate increased to 5.59% from 5.41% a year ago, reflecting lower average outstandings on the legacy First USA portfolio and higher losses, and decreased from 5.89% in the third quarter, reflecting lower losses. The managed 30-day and 90-day delinquency rates were 4.46% and 1.93%, respectively, down from 4.51% and 2.02% in the year-ago quarter and up from 4.25% and 1.80% in the third quarter.
#4 DISCOVER
Morgan Stanley reported that its Credit Services/Discover Card division posted fourth quarter net income of $193 million, a 31% gain from a year ago. Discover card receivables were up a modest 4.6% and credit card charge volume was down 3% from last year. MS says the increase in profits during the quarter ending November 30th was driven by higher net interest income and lower marketing and business development expenses, partially offset by an increase in net charge-offs. In addition, merchant and cardholder fees increased 12% from a year ago to $539 million. However, higher cardholder fees were primarily responsible for the increase. Discover said the decline in transaction volume was largely the result of lower balance transfers. The charge-off rate was essentially flat with the prior quarter, but up 128 basis points from a year ago. The over-90-day delinquency rate was 3.02% compared to 2.42% in fourth quarter 2000. The decline in credit quality reflects the weakness in the U.S. economy, a high level of national bankruptcy filings and the adverse impact of the seasoning of cardholder accounts. During 4Q/01, Discover opened 995,000 accounts and 161,000 new merchant locations.
#5 CHASE
Chase reported its operating earnings for its credit card division rose 33% in the fourth quarter and 16% for the full year. Credit card outstandings were up 12% for the year, ending at $40,811,000,000. On a managed basis, the credit card net charge-off ratio was 5.48% in the fourth quarter of 2001, compared to 5.64% for the third quarter of 2001 and 4.86% for the fourth quarter of 2000.
#6 CAPITAL ONE
Capital One posted a 39% leap in profits for the fourth quarter, from $128.3 million one year ago to $177.7 million. Marketing expenses for the fourth quarter were up 6.8% to $301.2 million, while the cost-per-account dropped from $78.09 one year ago to $73.69 for 4Q/01. For the latest quarter, Cap One added 3.7 million net new accounts, bringing total accounts to 43.8 million. The company's managed consumer loan balances increased by $6.8 billion in the fourth quarter to $45.3 billion. The managed net charge-off rate increased to 4.42% for 4Q/01 compared with 3.98% one year ago. The managed delinquency rate (30+ days) decreased to 4.95% as of Dec 31, compared with 5.23% for 4Q/00. The company's managed net interest margin decreased to 8.68% in the fourth quarter from 10.16% for the fourth quarter of 2000. The issuer says the decreased NIM was primarily due to an increase in the amount of loans at teaser rates, continued growth of its super-prime segment, and an increase in the company's liquidity during the quarter.
#7 PROVIDIAN
After delaying the release of its earnings report, Providian reported a net fourth quarter loss of $395 million from continuing operations, compared to an operating profit of $225 million for 4Q/00. The company also said that banking regulators have accepted its new "Capital Plan." Despite the restructuring, Providian posted a strong fourth quarter as it focused on the middle-market segment, largely abandoning the sub-prime market. During 4Q/01, the company added 500,000 net new accounts and added $950 million to total managed credit card loans. The managed net credit loss rate was 12.70% in the fourth quarter, compared to 8.49% one year ago. The 30+ day managed delinquency rate was 8.81% at year-end 2001, compared to 7.54% at the end of 2000. In light of the loss trends, Providian beefed up its loan loss reserve by $252 million during the fourth quarter. Total loan loss reserves now stand at $1.93 billion at year-end.
#8 AMERICAN EXPRESS
American Express Travel Related Services reported fourth quarter net income of $170 million, a 64% decline from 4Q/00. Weak business charge volume and higher provisions for losses were the major factors for the decline. However, these factors were partly offset by the decline in marketing/promotion expenses and a lower payroll. Included in the 4Q/01 results are $219 million pre-tax ($140 million after-tax) of restructuring charges. Excluding the restructuring charge, TRS 4Q/01 net income would have been $310 million, down 34% from last year. Fourth quarter charge volume was down 5.5% compared to 4Q/00. Card loans have also slowed to an 11.5% annual growth rate, compared to 15.5% growth rate for 3Q/01. Charge-offs have soared 34% over the past twelve months while delinquency has increase nearly 18%. Thanks to lower funding costs, the net interest yield has dropped almost 25% and interest expense was down 35%.
#9 BANK OF AMERICA
Bank of America reported an 18.1% increase in credit card receivables during 2001, ending the year with $27.2 billion in managed card loans. Charge-offs have been relatively stable for the past two quarters, but jumped from 4.32% for 4Q/00 to 4.90% for 4Q/01. Fourth quarter charge volume was only up 6.1% over the prior year, a reflection of soft holiday spending. For all of 2001, BofA's charge volume was up 7.7%.
#10 HOUSEHOLD
Household reported a very small increase in fourth quarter VISA and MasterCard receivables from $17,303,700,000 for the third quarter to $17,395,200,000 for 4Q/01. For the full year, Household's bank credit card outstandings were down 1.1%. Meanwhile, HH's private label credit card portfolio was up 15.1% for the year, to end at $13,813,900,000. Bank credit card charge-offs dipped slightly to 6.69% for the fourth quarter compared to 6.75% in the previous quarter. Delinquency (60+ day) was up significantly from 3.91% in the third quarter to 4.10% for 4Q/01. Charge offs within the private label portfolio were 5.40% and delinquency was 5.48%. |
