Profits (after tax) among the nation’s top four bank credit card issuers declined 9.0% in the fourth quarter (Q4/14), compared to one year ago (Y/Y) and down 4.3% sequentially (Q-Q). However, after adjusting for abnormal loan loss provisions in Q4/13, profits were up an estimated 8.4% Y/Y.
According to CardData, the skewed growth figures are related to Bank of America’s (BOFA) $322 million loan loss provision in Q4/13. BofA’s loan loss provisions for Q4/14 and Q3/13 were $610 million and $556 million, respectively.
Aggregate card after tax profits for the top four issuers logged in at $2449 million for Q4/14, compared to $2570 million in Q3/14 and $2560 million for Q4/13.
According to CardData, Citibank (CITI) and Capital One (COF) posted positive growth while Chase (CHSE) and Bank of America (BOFA) were negative.
CHSE Q4/14 after tax net income declined 7.7% Y/Y to $879 million, compared to $979 million in the prior quarter and $953 million in the year-ago quarter.
BOFA Q4/14 after tax net income declined by 16.4% Y/Y to $684 million, compared to $651 million in the prior quarter and $818 million in the year-ago quarter.
COF Q4/14 after tax net income edged up by 0.7% Y/Y to $487 million, compared to $550 million in the prior quarter and $455 million in the year-ago quarter.
CITI Q4/14 after tax net income rose by 19.0% Y/Y to $399 million, compared to $399 million in the prior quarter and $334 million in the year-ago quarter.
U.S. After-Tax U.S. Card Profits Historical
4Q/13: $953 million
1Q/14: $965 million
2Q/14: $724 million
3Q/14: $979 million
4Q/14: $879 million
4Q/13: $818 million
1Q/14: $641 million
2Q/14: $659 million
3Q/14: $651 million
4Q/14: $684 million
4Q/13: $455 million
1Q/14: $595 million
2Q/14: $607 million
3Q/14: $550 million
4Q/14: $487 million
4Q/13: $334 million
1Q/14: $353 million
2Q/14: $358 million
3Q/14: $399 million
4Q/14: $399 million
estimated based on total after tax net income of Consumer & Business Banking
** estimated from reported pre-tax profits
RAM Research predicts aggregate profits among the top four issuers will remain soft in the first quarter, likely edging down by 2.0%.
For more data on the Big 4 Issuer Bank Credit Card Profits access CardData®. For information and commentary on Big 4 Bank Credit Card Issuer Profits visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAM Research® forecasts on Big 4 Bank Credit Card Profits are available exclusively through CardWeb.com.®