Credomatic’s credit card businesses and banking operations in the Central American countries, with the exception of Panama, CIC is positioned to have one of the strongest financial franchises in the region. The group is a leader in the credit card business, while having a dominant market share in the acquiring and issuing businesses.
PayPal is now valued at $46 billion and the future is very bright. Analysts expect strong total processing value (TPV) growth to drive solid mid-teens FX neutral organic revenue growth through the intermediate-term, despite lower take-rates associated with rapidly growing mobile payments.
eBay will not be the same without PayPal and most analysts agree they have an uphill battle long-term due to intense competition. However, eBay is expected to divest its Enterprise business in a deal valued at $925 million, according to Forbes.
Emerging Markets Payments announced the official opening of its new office in the UAE. This will strengthen EMP’s presence in the UAE as well as supporting its expansion across the entire Arab Gulf Area. EMP operates across all links in the electronic payments chain and currently serves 130 banks and 30,000 retailers across 49 countries in MEA. In addition to serving as EMP’s processing hub for the region, the Dubai operation will also house the company’s International Disaster Recovery (IDR) site. The IDR site is a state-of-the-art facility which will ensure that EMP’s customers will enjoy the highest levels of service availability.
Fitch expects revenue to increase in the low single-digits in 2010, limited by a continuing soft global economic environment and job market as well as continued pricing pressure in the U.S. and Mexico markets. EBITDA margins to remain relatively constant near 30% as cost cutting actions taken by the company serve to offset regional pricing pressure. Free cash flow is projected to decline significantly in 2010 reflecting a $250 million refundable deposit against a disputed tax liability, a full year of higher dividend payments (approximately $160 million per year versus $41 million in 2009) and modestly higher capital spending. Fitch does expect free cash flow to return to historical levels in 2011 of approximately $800 million to $900 million. Working for WU is its extensive domestic and growing international agent network with a strong worldwide brand and revenue stability from strong global diversification and consumer exposure.
Charge-offs among retail credit card asset-backed securities eased back a bit in August, but hover above 12% while delinquencies (60+ days) continue to retreat below the 5% level. Since most U.S.-based retailers sold their receivables portfolios in recent years, the only two remaining players of significance are Nordstrom and Target. Fitch Ratings says that credit card performance should not have a negative impact on Nordstrom and Target corporate ratings based on current write-off expectations. Fitch expects significant pressure on credit card profitability to continue through the balance of 2009 and into 2010, as charge-offs are expected to remain at elevated levels as long as unemployment remains high. However, if the write-off rates start trending higher than expected based on worsening unemployment and a continued recession, Fitch would expect the credit card businesses to be loss-making, pressuring the companies’ credit ratings. While some companies built their credit card allowances in the second half of 2008,
others have continued to build their credit card allowances in the first half of this year in anticipation of further credit deterioration and Fitch does not expect most of the large general purpose card issuers to be profitable this year. The charge-off rate for outstanding prime credit card receivables declined in August, ending five consecutive months of record highs.
RETAIL CARDS ABS
Dec 08: 5.20% 10.51%
Jan 09: 5.58% 10.94%
Feb 09: 4.77% 12.31%
Mar 09: 4.81% 11.05%
Apr 09: 5.07% 12.08%
May 09: 4.76% 12.66%
Jun 09: 4.88% 12.23%
Jul 09: 4.65% 12.99%
Aug 09: 4.70% 12.50%
United Airlines debt ratings are sinking as the airlines grapples with higher fuel costs. Fitch Ratings yesterday revised its “Rating Outlook” for UAL to “Negative” from “Stable.” Ratings for UAL reflect the airline’s highly levered balance sheet, volatile cash flow generation capacity, and ongoing susceptibility to intense fuel and revenue shocks in an industry that remains particularly vulnerable to macroeconomic risk. United’s two primary credit card processing agreements provide for the holdback of cash by processors in certain circumstances. As of March 31, United reported $319 million in credit card holdbacks, classified as restricted cash on the balance sheet. United’s largest processor agreement provides for additional holdbacks, but covenants are linked to those in the credit facility at a reduced threshold. There is no fixed charge coverage test for the next four quarters. For the second processing agreement, there are currently no holdbacks. However, the processing institution could require the posting of cash collateral if certain material adverse changes occur.
NY-based Fitch Ratings reports it has placed Target’s credit ratings on “Rating Watch Negative” after the Company announced plans to divest its credit card portfolio. These actions follow the company’s announcement that it will review ownership alternatives for its credit card receivables as well as re-evaluate its use of debt in its capital structure and its pace of current and future share repurchases. Target has retained Goldman Sachs as its advisor and expects to complete these reviews by the end of December 2007.Fitch views these actions as a possible shift in its financial strategy. Of importance in resolving the Rating Watch Negative will be the amount and use of proceeds from a sale of the credit card receivables portfolio, the terms of any on-going agreement between Target and the potential acquirer and the changes in the company’s capital structure.
The Morgan Stanley Board has set June 30th as the date for the Discover Financial Services spin-off. After the distribution, which involves stockholders of record as of the close of business on June 18th, Discover will be an independent, public company trading on the NYSE under the symbol “DFS.” Morgan Stanley also announced Discover’s board of directors. Dennis Dammerman, who retired in 2005 as Vice Chairman of the Board and Executive Officer of General Electric Company and Director, Chairman and CEO of GE Capital Services, will serve as Non-Executive Chairman of the Discover Board. David Nelms, who has led Discover Financial Services since 1998, also will serve on the Board of Directors. Other Board members include: Jeffrey Aronin, President and CEO of Ovation Pharmaceuticals; Mary Bush, President of Bush International; Robert Devlin, Chairman of Curragh Capital Partners; David Komansky, Chairman Emeritus of Merrill Lynch; Philip Laskawy, former Chairman and CEO of Ernst & Young; Michael Rankowitz, senior advisor to Morgan Stanley; Lawrence Weinbach, Partner at Yankee Hill Capital Management.
PT Bank International Indonesia (BII), with more than 700 ATMs, has
connected to ATM BERSAMA network of Artajasa, making it a network
of 11,900 ATMs from 68 different banks. This partnership is part of an
effort to improve BII customer service as well as to other banks’ customers. As a result, all BII debit cards can be used in the ATM Bersama network and cardholders can now get discounts at thousands of merchants throughout the country and given the ability to do online transfers. BII has 230 branches and 700 ATMs with a total customer deposit base of more than IDR 37 trillion. The Bank also has IDR 53 trillion in assets.