Restructuring and Payment Rates Impact MBNA’s Q1

As expected, MBNA posted a sharp decline in net income for the first quarter to $31.7 million as the issuer swallowed a pre-tax restructuring charge of $767.6 million. Without the huge charge for staff reductions, facilities closings, and contract terminations, net income would have been $514.1 million for 1Q/05. MBNA also acknowledged that some of its pricing policies may be backfiring as U.S. cardholders hit with higher interest rates have been making higher payments than normal. The nation’s third largest issuer says the unexpectedly high payment volumes have adversely impacted its yield on managed loans. Managed loans for 1Q/05 were down about 1% year-over-year to $116.6 billion. Domestic credit card loans declined 7.8% from one-year ago to $74.8 billion. First quarter gross charge volume was up 4.6%, compared to 1Q/04, to $49.3 billion. Managed charge-offs continued to improve year-over-year, declining to 4.48%, but increased from the prior quarter’s 4.43%. One-year ago managed charge-offs stood at 4.99%. Delinquency on managed loans increased slightly to 4.17%, compared to 4.13% in 4Q/04. For 1Q/04 delinquency stood at 4.27%. During the quarter, MBNA increased the number of affinity groups to more than 1,500 offering an American Express card. The issuer also began marketing the new AmEx-branded clear card to members of some of our college and university affinity groups and entered into a formal agreement to market AmEx-branded credit cards to customers in the United Kingdom. For complete details on MBNA’s first quarter results visit CardData ([www.carddata.com][1]).

MBNA TRACK RECORD
Profits Loans
1Q/04: $519.7 MM $117.6 B
2Q/04: $660.3 MM $118.2 B
3Q/04: $728.3 MM $117.8 B
4Q/04: $768.9 MM $121.6 B
1Q/05: $ 31.7 MM $116.6 B
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

Oberthur’s First Quarter Revenues Rise 17%

Oberthur Card Systems reported that first quarter sales grew 17% to $154.4 million. During 1Q/05, the company delivered 43 million smart cards, compared to 34 million in the year ago quarter. However, the number of payment cards delivered was 19.6 million compared to 20.5 million for 1Q/04. Sales of payment cards decreased to $41.4 million, a 6.5% decline. Sales for magnetic stripe cards, scratch cards and memory cards increased 11.9% to $24.6 million. For complete details on Oberthur’s first quarter performance, visit CardData (www.carddata.com).

HSBC Names a Chief Credit Officer for North America

HSBC – North America has appointed Bruce Fletcher as SVP and chief credit officer for retail credit. Fletcher will oversee and integrate retail credit risk management for all of the company’s North American entities. Previously, he was with Citigroup as managing director of retail risk. Fletcher earned his bachelor’s degree in business administration from the College of William and Mary. HSBC – North America is a financial services organization with more than $300 billion in assets, serving almost 60 million customers.

Wincor Nixdorf Names BTG a Master Reseller

Paderborn-based Wincor Nixdorf has named Benchmark Technology Group as the master reseller of document printers for the U.S. and Canadian markets. Benchmark will be responsible for all certified warranty repairs, parts distribution, training and implementation of engineering changes. Wincor Nixdorf is global supplier of POS systems and ATMs. Benchmark Technology Group Provides branch technology solutions for financial services institutions.

AIR MILES Program Drives ADS’ Q1 Profits Higher

Dallas-based Alliance Data Systems posted a 15% increase in net income to $37.2 million and a 20% gain in Q1 revenue to $375.9 million. ADS says contributing factors were the roll out of two major national “Air Miles Reward” programs with Rona and the Bank of MontrealWestJet Airlines, as well as the acquisition Epsilon Data Management and surprising strength in its private label business. Transaction Services revenue decreased 2% in the first quarter to $167.7 million, impacted by difficult private label credit sales comparisons versus prior year which resulted in lower statement-generated growth. Credit Services revenue increased 7% in the first quarter to $151.4 million driven by portfolio growth, credit losses, funding costs and operating leverage. Marketing Services revenue increased 71% in the first quarter to $137.4 million driven by firm pricing, a lack of “Air Miles” sponsor attrition. ADS increased its 2005 cash earnings per share estimate to $1.87-$1.90, versus the $1.81-$1.83 stated previously. For complete details on ADS’ first quarter performance, visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

FuturSoft Oy Selects Rahaxi Processing Oy

Helsinki-based Rahaxi Processing Oy has entered into an agreement with FuturSoft Oy, a provider of information technology and software solutions for the automotive industry in Finland.
The agreement will allow Rahaxi access to new merchants. Futursoft
currently has a customer base of over 700 companies in Finland, Sweden
and Estonia. Rahaxi Processing OY currently processes in excess of 1,000,000 card payments per month for an established client base that comprises companies such as Finnair, Ikea, and Stockmann.

Q Comm Readies a New CFO to Take Over in June

Q Comm has appointed Mark Robinson as its new CFO. Robinson has over 20 years of finance, operations, and general management experience in the software, hardware, manufacturing and service industries. He is the former CFO and COO of Clickguard Corporation and served as the CFO and Co-President of Bluecurve Inc. Q Comm International is a prepaid transaction processor that electronically distributes prepaid products from service providers to the point of sale.

Metris’ Delinquency Rates Fall to Record Lows

Metris Companies (Direct Merchants Credit Card Bank) reported net income of $27.6 million for the first quarter, a 33.7% decline over the year ago quarter. However, net income was up sharply from the fourth quarter’s $700,000 profit. Metris says its two-cycle plus delinquency rate for its securitized balances was 8.3%, the lowest in almost four years, while the first-cycle ABS delinquency rate of 4.1% is the lowest in its history. The managed net charge-off rate was 14.5% for the first quarter, compared to 15.5% in the fourth quarter and 17.8% for the first quarter of 2004. New account originations for the first quarter were 163,000. Gross active accounts were 2.2 million and managed credit card loans were $6.2 billion as of March 31st. Total expenses were $108.2 million for the quarter, a $6.1 million decrease from 1Q/04. The decrease was primarily due to lower compensation, data processing services and communications, credit protection claims and occupancy expenses due to a reduction in gross active accounts. Partially offsetting this decrease was credit card account and other product solicitation and marketing expenses, which were $19.1 million during the first quarter of 2005, compared to $15.9 million for the quarter ended March 31, 2004. This increase of $3.2 million was due primarily to the increase in account marketing. For complete details on Metris’ first quarter results, visit CardData ([www.carddata.com][1])

[1]: http://www.carddata.com

Global Payments Inks Ark Restaurants for Processing

Global Payments will provide Global Access @dvantage reporting and transaction management services and payment card processing for New York-based Ark Restaurants Corporation. Ark Restaurants Corporation operates restaurants, bars, catering operations and wholesale and retail bakeries in New York, Las Vegas, and Washington DC. Global Payments Inc. provides electronic transaction processing services.

VISA/eFunds Expand Their Application Risk Tool

VISA and eFunds have expanded their service to reduce application fraud losses and account takeover fraud. The enhancement was developed with eFunds’ Chex Systems. The VISA/eFunds service is only available through VISA to its card-issuing Members. With the service, issuers will screen their debit and credit card applications and change of address requests against an enhanced database to verify a range of information variables such as address, phone numbers, bankruptcy information and now, related checking account fraud from eFunds. The new service joins the Issuers’ Clearinghouse Service, an application verification database populated with VISA and MasterCard application and fraud data. VISA says a recent study with three issuers found that the new service could have prevented an estimated 23.5% of their total fraud and charge-off losses. The addition of checking account industry fraud data on balance provided in this study a nearly 50% increase in detection performance. The enhanced service will be available in the third quarter.

Total Card Renews its Certegy Processing Contract

Certegy has renewed a five-year agreement with South Dakota-based Total Card to provide transaction processing services to over 250,000 cardholders nationwide. Certegy Inc. provides global credit and debit processing to over 6,500 financial institutions, 117,000 retailers and 100 million consumers. Total Card performs front-to-back operations for its owned portfolio of VISA credit cards issued by Plains Commerce Bank.

Choice Hotels to Offer Shift4’s $$$ ON THE NET

Choice Hotels International has signed an exclusive three year agreement with Shift4 to provide its $$$ ON THE NET software to franchisees. $$$ ON THE NET allows Choice’s associates to quickly, accurately and securely process credit card transactions from their property management systems through any processor. Shift4 provides web-based, real-time enterprise payment solutions for the hospitality, retail, foodservices and e-commerce markets.Choice Hotels International is one of the world’s largest lodging franchisors, marketing more than 5,000 hotels in over 40 countries.