Advanta 1Q/99

Advanta Business Cards reported yesterday net income of $4.0 million for the first quarter. The average yield on the company’s business credit card portfolio, including fee income, increased this quarter to 20.36% from 19.85% last quarter due to increases in rates and higher fee income. This was partially offset by an increase in the net managed charge-off rate on business credit card loans of 5.61% this quarter compared to 5.46% last quarter. Managed receivables for ‘Advanta Business Cards’ at the end of the quarter were $832 million, up 2.1% from last quarter and 18.8% from the same quarter last year. For more details on Advanta’s 1Q/99 financials visit CardData ([www.carddata.com][1]).

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

Solid First Quarter

American Express Travel Related Services reported record quarterly net income of $363 million, up 15% from a year ago. TRS net revenues also increased 11% from the prior year despite a general tightening of corporate T&E, and the cancellation of 1.6 million U.S. Government cards in the fourth quarter. The withdrawal from the government business represents approximately $3.5 billion in annualized spending. The impressive first quarter income results were driven by an 8% increase in US charge volume, an 18% surge in US card receivables and an increase in other revenues from the acquisitions of ATM networks. Chargeoffs dropped to 5.9% during the first quarter from 6.3% one year ago. First quarter delinquency (30-89 day) also dipped to 2.1%, from 2.5% for first quarter 1998 and 90+ day delinquency declined from 1.1% last year to 1.0% this year. For full financials details on AmEx visit CardData ([www.carddata.com][1]).

AMEX TRACK RECORD

1Q/99 4Q/98 3Q/98 2Q/98 1Q/98
Receivables $16.7b $16.7b $15.4b $14.8b $14.2b
Q Volume $41.6b $44.2b $41.5b $41.4b $38.5b
Cards 27.9m 27.8m 29.5m 29.6m 29.5m

Source: CardData (www.carddata.com)

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

Citi Card Income

CitiGroup reported this morning that core income for credit cards increased 75% to $268 million in the first quarter. Citi says revenues increased 40% as a result of pricing increases and 48% growth in receivables to $69 billion, driven by the UCS acquisition and core business improvement. Credit experience also continued to improve, with net charge-offs in the U.S. bankcard portfolio falling to 4.72%. More details on Citi’s first quarter performance will be available in Tuesday’s CardFlash with full financial details available via CardData ([www.carddata.com][1]).

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

Discover Recovers

Morgan Stanley Dean Witter reported Thursday that first quarter 1999 net income for its Credit and Transaction Services unit increased by 36% compared to 1Q/98. The fiscal quarter, which ended Feb. 28, shows net income for Credit and Transaction Services of $135 million versus $99 million one year ago. The significant jump in earnings was a surprise considering MSDW unloaded SPS, the Prime Option card portfolio and the Bravo card portfolio late last year. One of the main contributors was a 122 basis point drop in net chargeoffs and a 32 basis point drop in delinquency. As a result, provisions for consumer loan losses dropped 34%, from $684 million for 1Q/98 to $451 million for 1Q/99. For complete 1Q/99 financials for Discover visit CardData (www.carddata.com) and click on Earnings Reports.

DISCOVER’S 1Q/99 STATS

1Q99 4Q98 1Q98
Outstandings: $32.1b $32.5 $35.8
Total Cards: 37m 38m 40m
Merch. Locs: 100k 97k 90k
Chargeoffs: 6.28% 6.94% 7.50%
Delinquency: 7.08% 6.53% 7.40%
Yield: 14.06% 14.72% 14.72%
Spread: 8.23% 8.71% 8.46%

b-billions; m-millions; k-thousands; delinquency-30+ day;
yield-interest yield; spread-interest spread; CardData (www.carddata.com)

FDC 4Q/98

First Data Corp. reported Friday that fourth quarter revenues declined 2.2% due to recent divestiture activity. Card issuer services revenues also decreased in the fourth quarter by 2% to $380 million. FDC says the decline reflects the expected reduction in revenues from customer service and information management compared to the prior year. Volume trends remain strong with total accounts on file up 17% to 212 million, while active accounts increased 12%. For the year, card issuer revenues increased 6.2% to $1,434 million. Processing revenues increased 9%, while information services revenues declined 8%. Merchant processing services revenues were essentially flat for both the fourth quarter and the year at $389 million and $1,394 million, respectively. In merchant card processing in the quarter, dollar volume processed increased 11%. Operating profits declined 4% to $264 million.

Citi Card Earnings Up 80%

Despite a softening in earnings among other bank segments Citigroup reported Monday its consumer business produced record fourth quarter results. Citi’s credit card business realized an 80% increase in earnings to $277 million attributable to pricing changes, lower funding costs, declining charge-offs and growth in charge volumes. Citi’s U.S. card portfolio grew 40% last year due to its acquisition of the Universal Card portfolio. Internationally, Citi said its Latin America consumer business experienced a 49% quarterly earnings decrease to $29 million because of a declining contribution from Credicard, a 33%-owned Brazilian card affiliate. For more 4Q/98 data on Citigroup please visit CardData ([www.carddata.com][1]).

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

AmEx TRS Up 16%

American Express reported Monday its TRS division produced record fourth quarter net income of $326 million, a 16% increase over the $281 million reported a year ago. For the year TRS reported record net income of $1.36 billion, up 17% from a year ago. AmEx says TRS’ net revenues increased 8% from the prior year, reflecting higher billed business in the U.S. and internationally, as well as growth in cardholders loans, wider interest margins and higher travel commissions and fees. Higher spending per cardholders and growth in average cards outstanding led to the increase in billed business. The number of total cards in force at year-end reflects substantial growth in cards outside the U.S., offset by the cancellation of 1.6 million U.S. Government cards, effective Nov. 30, due to the company’s decision to withdraw from the U.S. Government Card business. For more detailed 4Q/98 financials on AmEx please visit CardData ([www.carddata.com][1]).

AMEX  4Q/98  U.S. STATS
                          4Q/98        4Q/97         CHNG
Total Cards               27.8m        29.6m        -6.1%
Q Volume                 $44.2b      $40.7b        +8.7%
Card loans               $16.7b      $14.6b       +14.9%
Delinquency               3.1%         3.5%          NA
Net Chargeoffs            6.2%         6.3%          NA
Net Int Yield              9.5%         9.4%          NA

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

Innovis Closes

First Data Corp. recently announced it is closing down operations of its Innovis division, formerly Consumer Credit Associates. Houston-based Innovis provided consumer credit reporting information. Approximately 150 employees, primarily based in Houston, will be affected. First Data will take a one-time charge to earnings of approximately $145 million pretax for the period ending Dec. 31, 1998.  First Data acquired CCA based on the potential of its technology and database and has been investing significantly to develop an on-line transaction-based credit bureau.

PNC Exits

Just as the holiday break got underway Pittsburgh-based PNC announced the sale of its entire portfolio to MBNA. PNC will receive a 15% premium on outstanding credit card receivables of approximately $2.9 billion and 3.3 million accounts. The sale includes AAA-branded affinity credit card accounts. The transaction is expected to close within the first quarter. MBNA has also entered into long-term agreements with both PNC Bank and AAA. MBNA will market credit card products to the 3.3 million households served by PNC and the 36 million members of AAA. However PNC will continue to market consumer loan and deposit products to AAA members nationwide through the AAA Financial Services program. Fitch IBCA says the transaction will allow PNC to bolster lagging loan loss reserves, strengthen capitalization, and allow the company to reallocate capital resources to higher return, strategic businesses. Fitch also noted the card sale will benefit PNC’s consolidated capital ratios. According to CardData ([www.carddata.com][1]) PNC had $3,867,150,000 in 3Q/98 receivables and 2,075,445 active accounts.

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

Citigroup Expansion

While Citigroup announced yesterday it is cutting more than 10,000 jobs worldwide with more than 3,500 positions to be eliminated in the U.S., the company will nonetheless beef-up its credit card telemarketing unit. Citibank says it will hire 700 telemarketers to fulfill its direct marketing initiatives which are showing significant potential. For example Travelers Property Casualty has sold approximately 3,000 auto and homeowners insurance policies through the call centers servicing Citibank’s card operations. The cross marketing has also spread to other areas. Primerica has opened some 1,000 new Citibank checking accounts through cross-marketing in Las Vegas and Atlanta. Citibank currently has approximately $64 billion in U.S. bank card receivables according to CardData  ([www.carddata.com][1]).

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

Technology Survey

A major international poll released today reveals that Americans and consumers worldwide favor home-based voting via the Internet.

The survey also provides perspective about worldwide Internet usage and other consumer opinions about technology’s role in retail, government and education.

Some 60 percent of U.S. respondents agreed that voting from home via the Internet would increase their participation in the electoral process. This compares to 52 percent of British respondents, 51 percent of those polled from Sweden and 47 percent from Germany. With only a 35 percent positive response, the French were far less enthusiastic about using technology for home voting; 63 percent of respondents in France were against the idea of home voting.

The study, sponsored by ICL, a leading supplier of IT systems and services in more than 70 countries worldwide, is one of the first international comparisons of how technology has affected consumer attitudes, lifestyles and shopping habits. During the summer of 1998, 3,500 confidential telephone and face-to-face interviews were conducted with residents in five countries: the United States, France, Germany, Great Britain and Sweden. The questionnaires for each country were similar, with adjustments only when necessary to ensure questions were relevant to that particular country and culture. The research was conducted and tabulated by Market Opinion Research International (MORI), based in London.

Other significant findings are listed on the following pages.

General

— Forty-nine percent of American and 46 percent of Swedish respondents currently are using the Internet and just 17 percent of the French are doing so. Asked why they are not using this technology, 43 percent of French respondents said it is not relevant to them. Internet usage in Germany (24 percent) is also comparatively low, with lack of interest (34 percent) cited as the main reason.

— Americans differ with much of the world regarding Internet regulation. While at least two-thirds of all those surveyed in Europe thought an independent body should govern the Internet, more Americans disagreed than agreed with this statement.

— Technophobia is still prevalent in France (50 percent) and Great Britain (45 percent). In each of these two countries, slightly more respondents agreed than disagreed with the statement, “I find technology such as personal computers confusing.” — Americans and Swedes (63 percent both) scored highest in their confidence in their countries’ technological prowess and leadership.

Retail

— Nearly half of all loyalty cardholders regularly make use of the points or rewards they have collected through their cards, including 45 percent of Americans, and 72 percent of the British. This was the case even though Americans, at 66 percent, were especially emphatic in disagreeing with the statement, “My loyalty cards make me shop more often at places that provided them.” Nearly half of all respondents from Great Britain and Germany also disagreed with the statement.

— Americans also appear more willing to explore alternatives to traditional shopping, such as the Internet. Only 60 percent of U.S. respondents indicated they will not change their shopping behavior, while that number was 80 percent in France.

— Thirty-seven percent of Americans polled would be interested in a weekly food shopping service that delivers to the home or workplace, while the French, at 27 percent, were least interested. The British expressed the highest interest with 41 percent responding positively.

— Supermarkets — when compared to airlines, banks, gas stations, insurance companies and independent retailers fared best when asked what types of organizations had most improved their customer service during the last decade. Some 72 percent of Americans, 81 percent of the British and 75 percent of the French surveyed thought supermarkets had most improved their service over the past decade.

Government and Education

— Americans (82 percent) are the most committed to using technology in education, while the French, at 59 percent, are the most uncertain about it.

— 70 percent of respondents from all five countries believed that technology will improve children’s education. Americans gave the schools an only slightly better than average grade for their use of technology to date.

— Americans were more likely to want electronic access to additional government information at libraries (28 percent) or at home via the Internet (27 percent). According to the British, supermarkets (30 percent) would be the best places to install government information access kiosks, while the town hall got most of the votes from French (42 percent) and German (32 percent) respondents.

A leading supplier of IT systems and services, London-based ICL operates in more than 70 countries worldwide. ICL’s retail systems division is based in Dallas. Employing more than 19,000, ICL posted 1997 revenues of 2.477.1 million pounds (approximately $4 billion) with a pretax profit of (pound)30 million pounds (approximately $51 million). The company implements IT systems for major projects and provides innovative services to a range of industries, including retail, finance, travel, telecommunications, and utilities, as well as education and local and central governments. ICL services include outsourcing, helpdesks, network services, Inter/intranets, electronic commerce solutions, interactive kiosks, smart card systems, digital cities and Web sites.

MORI is the largest full-service independent research firm in the United Kingdom. Founded in 1969 and based in London, it is best known for its political polling and worked for more than 500 public and private sector clients in 1997.

For more information, contact Roy Miller or Matt Ricketts at Michael A. Burns & Associates Public Relations at 214/521-8596, or via email, at [[email protected]][1] or [[email protected]][2].

[1]: mailto:[email protected]
[2]: mailto:[email protected]

Advanta 3Q

Advanta reported yesterday that it picked up $350 million in business card receivables during the third quarter. Net managed charge-offs on business credit card loans was 5.79% for the third quarter compared to 6.57% in the second quarter. Advanta exited the consumer card business earlier this year, selling off its portfolio to Fleet. For complete 3Q financials and historical data on Advanta visit CardWeb’s CardData service ([www.carddata.com][1]).

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