NBK SIDECARD

The National Bank Of Kuwait SAK has launched the first “SideCard” in the Middle East, North Africa and Pakistan Region. The new “NBK Mini MasterCard” is 33% smaller with smoother and sleeker lines then the “Classic MasterCard” and can be attached to a keychain. The card is issued as a supplementary card and cannot be used at ATMs. NBK is the largest financial institution in Kuwait. In 2003, NBK reported a record net profit of $412 million (a 14% increase over the prior year) with a return on average equity of 27.7%, a return on assets of 2.27% and total assets of $18.4 billion.

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Fair Isaac Beefs-Up LiquidCredit

Fair Isaac has released the latest version of its “LiquidCredit” decision engine, a browser-based instant credit decisioning solution that combines advanced analytics and process automation to help lenders evaluate consumer and small business loan applications and make more informed lending decisions. The tool is used by more than 300 financial institutions worldwide. “LiquidCredit v6.3” incorporates additional bureau-delivered credit risk scores, including Equifax’s “BEACON 5.0” and the companion industry option models, which offer more refined risk prediction and are more consumer-friendly due to improved inquiry logic. Additionally, the enhanced bureau data is available in a parsed format, giving users access to the specific data fields that bureaus return. These latest enhancements provide lenders with more flexibility in servicing their customers and determining the proper credit/pricing offer while effectively managing risk. Several new Fair Isaac clients have already chosen “LiquidCredit 6.3” as their credit decision engine, including Houston-based Sterling Bank.

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Certegy Completes Saks Installation

Certegy has completed the installation of its check authorization platform at 62 Saks Fifth Avenue stores and 54 Off 5th stores. Certegy’s ability to manage risk under the current check services agreement with the Saks Department Store Group influenced Sak’s decision to convert its SFAE stores to the Certegy platform. Certegy serves over 329,000 retail outlets in North America, Europe, and Asia Pacific, making it the world’s leading provider of check risk management solutions. Saks Incorporated operates Saks Fifth Avenue Enterprises as well as its Saks Department Store Group, which includes 241 department stores.

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VeriFone Names a New CFO

VeriFone has named Barry Zwarenstein as SVP/CFO, effective today. Mr. Zwarenstein’s responsibilities will include finance, investor relations, legal, human resources, and IT functions. Zwarenstein held various positions such as CFO for FMC Corporation, Logitech S.A., Acuson Corporation, and Iomega Corporation. He holds a Bachelor of Commerce degree from the University of Natal, South Africa and a MBA from the Wharton School of Business at the University of Pennsylvania. VeriFone, Inc. delivers solutions for the financial, retail, petroleum, government, and heathcare markets. The Company has shipped over 11 million electronic payment systems.

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Carreker Hires Buglioli for GPC

Dallas-based Carreker Corporation has hired Lou Buglioli for its Global Payments Consulting division. Mr. Buglioli has 34 years of experience in financial services and consulting. He will be advising Carreker clients on payments strategy, operations, and technology infrastructure and implementation. He will also serve as a leader to the GPC division. Carreker Corporation helps financial institutions improve their earnings.

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VISA to Launch New Business Ads

Seeking a higher slice of business and government spending, VISA USA is rolling-out a completely new print advertising campaign to support its commercial offerings. The new campaign, which will begin at the end of this month, is designed to demonstrate a different way of thinking about the business of paying and being paid. The new ads will feature a new tagline that reads ‘It’s everywhere you want your company to be’, and an image of the “Swan Chair,” designed by Fritz Hanson, to symbolize a platform from which businessmen and women can voice their aspirational business goals and desires. The new ads will also incorporate a more bold use of color using a black, gold and white theme that clearly differentiates from VISA’s consumer image, and a series of icons to represent core components of VISA’s commercial offerings, including “Information Management” and “Knowledge” services. VISA’s new CCE metric estimates total business and government spending of $14.3 trillion by the end of this year, nearly twice that of the $8.2 trillion consumer spend predicted by the governments “Personal Consumption Expenditure.” (CF Library 5/19/04)

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Record ROA to Deteriorate Slowly

As soon as the stock market closed yesterday banks across the country began raising the prime rate from 4.00% from 4.25% following the Fed decision two hours earlier to raise the federal funds rate by 25 basis points to 1.25%. Six of the nation’s largest issuers will apply the new prime rate to their variable rates beginning in July. Chase, Discover, Bank of America, and Household Bank use the last business day of the month as rate adjusting dates. American Express uses the higher of the 1st or the 20th of each month. Citibank, sets its rates two days prior to the closing date of the billing cycle. Historically, a rising prime rate has dampened credit card profitability. Variable rate cards did not become popular until 1993 following the introduction of the General Motors MasterCard in the fall of 1992. Since then a high prime rate, which generally trends with the cost-of-funds, has correlated with weak profits. In 1998 when the prime rate held at 8.50%, the average pre-tax

ROA dropped to 2.5%. Last year, with the prime rate hovering between 4.00% and 4.25%, marked a record year for card profits as the average pre-tax ROA hit 4.4%.

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Profitability vs Prime Rate
YEAR ROA PRIME
1992 3.1% 6.29%
1993 3.3% 6.00%
1994 3.9% 7.04%
1995 3.6% 8.85%
1996 3.3% 8.27%
1997 2.6% 8.44%
1998 2.5% 8.38%
1999 3.1% 7.98%
2000 3.6% 9.21%
2001 4.0% 7.02%
2002 4.2% 4.67%
2003 4.4% 4.12%
Source: CardData (www.carddata.com)

[1]: http://www.cardweb.com/images/c/charts3/prime_roa.jpg

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CU Exit Continues Due to Weak ROAs

Though credit unions represent the majority of all credit card issuers in the USA today, they manage less than $22 billion in revolving credit, about a tenth of that managed by banks. A new study has also found that credit unions produced a 3.8% annual growth rate last year compared to 14%+ for banks, much of that from credit card portfolio purchases. Furthermore, credit unions cards earned an average 1.05% ROA last year, while general bank cards earned 4.53% ROA pre-tax. Thousand Oaks, CA-based R.K. Hammer Investment Bankers say the analysis explains why credit unions are continuing to exit the card business. Over the past three years credit unions have left the card issuing business at a rate of 133 per year, with banks representing virtually all the buyers. Over 140 more credit unions are expected to exit the card business again this year. But, nine out of every ten of these have ongoing relationships with the portfolio buyers, providing CU members with card products and CU’s with fee income.com)

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Canada’s AccesRail Goes UATP

Canada’s AccesRail, a general sales agent for rail carriers based in Quebec, has begun accepting UATP as a form of payment for rail fare. AccesRail enables UATP account holders to have a convenient means of payment for rail tickets. The UATP program has increased in Europe after the launch of the SAS Corporate Card and the introduction of UATP electronic billing in important European markets. UATP is a worldwide travel payment network. 15 member airlines issue UATP accounts and over 200 airlines accept UATP as a form of payment for corporate business travel.

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Viad Spins-Off Travelers Express

Viad has spun-off its Travelers Express payment services unit. Under the new corporate name of MoneyGram International, Inc., the stock began trading under the “MGI” NYSE ticker this morning. Phil Milne, who has been president and CEO of Travelers Express Company since 1996, said both Travelers Express and its MoneyGram Payment Systems businesses will operate as subsidiaries of MGI. MGI, based in Minneapolis, has 68,000 agents reaching into more than 160 countries. Shares of MoneyGram common stock were distributed, effective 11:59 p.m. ET, on June 30th, to holders of Viad common stock

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California Drops Car Card Fees

The California Department of Motor Vehicles yesterday announced it is dropping its $4 credit card fee to encourage Internet renewals for vehicle registrations, effective today. When the DMV first launched Internet renewals four years ago, the department absorbed the merchant fee. But, after the first few months, the Legislature insisted the DMV begin passing the $4 fee along to customers. With the fee, roughly 4.5% of registration renewals (about 1 million transactions per year) have been handled by the Internet. However, the DMW says it has became clear that the fee was discouraging significant numbers of customers. DMV officials hope the elimination of the fee may increase Web renewals by more than 50%. The move is in response to Governor Arnold Schwarzenegger’s directive to reduce lines and wait times at DMV field offices as quickly as possible.

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