Bank of America this week reported that the number of online banking subscribers has hit 6.2 million with 2.6 million who pay their bills online.
VISA’s “Interlink” online POS debit card network and “DPS” off-line debit card service beat out Concord EFS and its “STAR” network for the Wachovia contract. Wachovia also announced Thursday it has awarded its ATM transactions business to NYCE. The “Plus” network will continue to serve as Wachovia’s international ATM network and a secondary network to NYCE in the USA. Wachovia has been mulling its contract with Concord EFS for the past year. Concord EFS confirmed yesterday it was notified by Wachovia of its desire to move its network access business prior to its current contract expiration date of December 31, 2004. Concord says it does not expect its earnings in 2003 or 2004 to be affected by this event due to the continuing payment obligations contained in Wachovia’s contract. Last year Concord hired former VISA senior executive Bond Isaacson to assist with the renewal of several expiring contracts. Isaacson is to receive a $500,000 bonus for each large financial institution which renews and an additional $2 million bonus if he renews a certain number of the financial institutions on Concord’s list. He was hired in September of last year as EVP, and was promoted in February to co-CEO and named a director. Isaacson formerly worked for BofA, VISA, and IBM. (CF Library 9/13/02; 2/13/03; 4/1/03).
Americans carried an average balance of $2,526 on each bank credit card account at the end of July, compared to $2,451 for July of last year, based on data for the top ten U.S. issuers. Year-to-date charge volume, among the top issuers, averages $2,611 per active account, compared to $2,469 for July 2002. Bank One continues to lead the top issuers with the highest average balance per active account of $3,793 and the highest year-to-date volume of $4,767 per active account. While Capital One, an issuer specializing in under $20,000 credit limits, has the lowest year-to-date volume per active account of $1,170.
TOP TEN ISSUER STATS – JULY 2003
(ranked by total outstandings as of 7/31/03)
ISSUER AAB AAV
1. Citibank $2506 $3022
2. MBNA $2447 $3054
3. Bank One $3793 $4767
4. Chase $3066 $2994
5. Discover $2350 $2696
6. Cap One $1637 $1170
7. BofA $3059 $3020
8. Providian $2351 $1351
9. Household $1440 $1802
10. Fleet $2607 $2232
AVG $2526 $2611
AAB- average balance per active account; AAV- average year-to-date volume per active account
Source: CardData (www.carddata.com) and RAM Research Group’s Bankcard Barometer
In a sign that credit quality is slowly improving in the card industry, delinquency for the second quarter, among the top VISA and MasterCard issuers, declined 26 basis points over the first quarter to 6.18%. However, compared to one-year ago, delinquency rates (30+ days) have climbed 32 bps, from 5.86%. All but one top issuer reported a decline in delinquency rates during the second quarter. FleetBoston reported that its delinquency rate edged up by 6 bps to 3.89%, compared to the first quarter. The largest declines were experienced by Providian and Sears National Bank. Meanwhile, American Express reported that its 2Q/03 delinquency rate fell to 2.7% from 3.1% in the first quarter, and 3.1% in 2Q/02. Discover reported its over-30-day delinquency rate increased 58 basis points to 6.21%, and the over-90-day delinquency rate increased 36 basis points to 3.01%, compared to the second quarter of 2002. For more historical information on delinquency rates visit CardData (www.carddata.com).
TOP TEN VISA/MASTERCARD ISSUERS –
DAYS 2Q/03 1Q/03 CHNG
1. Citigroup: 90+ 1.86% 1.91% – 5 bps
2. MBNA: 30+ 4.46% 4.74% -28 bps
3. Bank One: 30+ 3.95% 4.08% -13 bps
4. Chase: 30+ 4.40% 4.59% -19 bps
5. Cap One: 30+ 4.83% 4.97% -14 bps
6. Providian: 30+ 9.72% 10.31% -59 bps
7. BofA: 30+ 5.79% 6.09% -30 bps
8. Fleet: 30+ 3.89% 3.83% + 6 bps
9. Sears Natl 30+ 7.41% 7.87% -46 bps
10. Dir Merch: 30+ 11.20% 11.50% -30 bps
30+ DAY AVG*: 6.18% 6.44% -26 bps
NR- not reported * 90+ day is not meaningful
* does not include Household which is now part of HSBC
SOURCE: CardData (www.carddata.com)
Charge-offs among the top ten U.S. VISA/MasterCard issuers rose 22 basis points during the second quarter compared to the first quarter. Charge-offs stood at 8.47% compared to 8.25% for 1Q/03, and 7.95% one year ago. According to CardData ([www.carddata.com]), only four issuers reported declines in charge-offs for the second quarter including MBNA, Bank One, Capital One and Providian. Sub-prime specialist Metris continues to experience high losses as it charge-off rate topped 19%.
TOP TEN VISA/MC ISSUER CHARGE-OFFS
2Q/03 1Q/03 CHNG
1. Citigroup: 6.23% 6.04% + 19 bps
2. MBNA: 5.35% 5.47% -12 bps
3. Bank One: 5.21% 5.29% – 8 bps
4. Chase: 6.01% 5.87% + 19 bps
5. Cap One: 6.95% 7.12% – 17 bps
6. Providian: 16.84% 17.34% – 50 bps
7. BofA: 5.74% 5.25% + 49 bps
8. Fleet: 6.56% 6.13% + 43 bps
9. Sears Natl: 6.71% 6.11% + 60 bps
10. Metris: 19.10% 17.90% + 120 bps
AVERAGE: 8.47% 8.25% + 22 bps
* does not include Household which is now part of HSBC
Source: CardData (www.carddata.com)
The Defense Finance and Accounting Service reminded military service members who travel on temporary duty and use government credit cards, that they must now use the split disbursement feature which automatically pays Bank of America, for credit card charges for travel. The requirement also affects partial/accrual payments for long-term temporary travel and local travel, if the credit card is used. The new procedures require the supervisor/travel approving official/reviewer to return to the traveler any claims that do not accurately reflect the charges to be sent to the credit card vendor. Money owed to the service member that is above the amount owed Bank of America will be sent by electronic funds transfer to the service member’s bank account. The requirement was effective April 23, 2003.
More than 15 million “VISA Mini Cards” have been produced and issued by IL-based Versatile Card Technology since the launch of the card in October. Bank of America’s “Mini VISA” is about half the size of a regular credit or debit card that can be attached to a key chain. The card can only be used with swipe terminals, not ATMs. BofA has exclusive rights to issuing the mini card for a one-year period. Following the first year, under a license from Bank of America, VISA member banks will be permitted to issue VISA-branded mini cards, for which Bank of America will receive royalty payments. The “Mini VISA” is a response to the successful launch in March 2002 of the Discover “2GO Card,” a small, oval shaped credit card, in a protective case, that attaches to a key chain, belt, or money clip. Discover has not released data on the number of “2GO Cards” issued. Versatile Card Technology is a certified manufacturer of VISA cards with facilities located in Turkey, Germany, Mexico, Singapore, South America and India. (CF Library 3/21/02; 10/2/03)
Outstandings among the nation’s top VISA and MasterCard issuers are growing at the rate of 5.4%, compared to a 9.0% growth rate for all of 2002. Sears National Bank and Bank of America have emerged as the market leaders with growth rates exceeding 13%. MBNA and Capital One, long-time growth engines, have slowed to an annual growth rate of 6.6% and 4.7%, respectively. Providian continued to shed sub-prime loans to improve its risk factor and Fleet’s card business, formerly run by Providian’s current CEO, has slightly contracted over the past twelve months. Meanwhile, the “Sears Gold MasterCard” continues to post industry records, gaining nearly 50% since June 2002. For complete details on the top U.S. issuers for the second quarter visit CardData ([www.carddata.com]).
TOP TEN VISA/MASTERCARD ISSUERS
(based on EOP 2Q/03 outstandings)
2Q/03 2Q/02 Y/Y CHG
1. Citigroup*: $113.3b $111.5b + 1.6%
2. MBNA: $ 80.8b $ 75.8b + 6.6%
3. Bank One: $ 73.0b $ 66.8b + 9.3%
4. Chase: $ 51.0b $ 49.5b + 3.0%
5. Cap One: $ 47.2b $ 45.1b + 4.7%
6. BofA: $ 30.8b $ 27.1b +13.7%
7. Providian: $ 17.8b $ 19.9b -10.6%
8. Household: $ 16.6b $ 15.4b + 7.8%
9. Fleet: $ 14.6b $ 14.7b – 0.7%
10.Sears Natl: $ 12.6b $ 8.5b + 48.2%
TOTAL: $457.7b $434.3b + 5.4%
* Citigroup includes Canada; SOURCE: CardData (www.carddata.com)
SOURCE: CardData (www.carddata.com)
Bank of America’s pre-tax second quarter credit card profit soared 77% over the year-ago period, and year-to-date is up more than 52% over 2002. BofA says the higher profits were driven by a 9% increase in purchase volume and a 14% increase in outstandings. For 2Q/03 BofA reported pre-tax credit card income of $291 million, compared to $281 million in the prior quarter, and $164 million one year ago. Card outstandings at the end of the second quarter were $30.8 billion, compared to $27.1 billion for 2Q/02. Net managed charge-offs, as a percentage of average managed receivables, was 5.74% for the second quarter, compared to 5.25% for 1Q/03, and 5.59% one year ago. BofA says the increase reflects the growth and seasoning of the portfolio, as well as the impact of the economy. However, delinquency declined in the second quarter. The managed 30+ days delinquency rate was 3.99% for the second quarter, compared to 4.18% in the prior quarter, and 3.78% for 2Q/02. The managed 90+ days delinquency rate was 1.80% for 2Q/03, compared to 1.91% in the first quarter, and 1.76% one year ago. BofA also noted this morning that debit card purchase volume was up 19% for the quarter. For complete details on BofA’s second quarter performance visit CardData ([www.carddata.com]).
Vital Processing has renewed and expanded its service agreement with Bank of America. The agreement will help Bank of America better serve and support its national merchant acquiring customer base. Under the agreement, Vital remains the provider of point-of-sale authorization and capture services for Bank of America as well as the provider of clearing and settlement services.
Bank of America and Mexico’s Grupo Financerio Santander Serfin have inked a reciprocal ATM access deal. Effective this week, BofA customers will now have free access to 1,770 Santander Serfin ATMs throughout Mexico. In return, Santander Serfin customers will have free access to 13,000 Bank of America ATMs in the USA. In December 2002, Bank of America acquired 24.9% of Santander subsidiary, Grupo Financerio Santander Serfin. Bank of America says 75% of the total U.S. Hispanic population lives within its service area. Grupo Financerio Santander Serfin is the most profitable and the third largest bank in Mexico.
Bank of America customers now have free access to 1,770 Grupo Financerio Santander Serfin ATMs throughout Mexico. In return, Santander Serfin customers will have free access to 13,000 Bank of America ATMs in the USA. The reciprocal agreement will take effect June 15th. In December 2002, Bank of America acquired 24.9% of Santander subsidiary, Grupo Financerio Santander Serfin. Bank of America says 75% of the total U.S. Hispanic population lives within its service area.