Citi Card Securitization Revenues Slip in 1Q/09

Citibank reported that Global Cards GAAP revenues declined 10%, mainly
due to higher credit losses flowing through the securitization trusts in
North America. Average managed loans declined 7%, due to lower purchase
sales across most regions and the impact of foreign exchange. In North
America, GAAP revenues declined 17% as lower securitization revenues
primarily reflected the impact of higher credit
losses in the securitization trusts. Managed revenues increased 6%,
driven by a 252 basis point increase in the managed net interest margin
to 12.61%, partially offset by the absence of a prior-year gain on Visa
shares of $349 million. The managed net credit loss ratio increased 395
basis points to 8.88% in the Citi branded portfolio and 508 basis points
to 12.40% in the retail partners portfolio. The ratio reflects higher
net credit losses, exacerbated by the decline in average managed loans.
For complete details on Citi’s first quarter performance visit carddata.com.

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TowerGroup Says is Time to Re-evaluate Risk Models

The severe contraction that the credit card industry is experiencing
after decades of business boom is, according to a new
research report by TowerGroup, a direct result of antiquated business
models used to measure risk and monitor changing consumer profiles.
TowerGroup believes it will take time for the industry to change its
business model, but that forward-thinking issuers should begin planning
for the post-recession era even as they struggle in a down economy
today. Although card issuers have standard measurements in place such as
industry-wide credit scores, they often neglect to examine the big
picture of consumers’ creditworthiness realistically. To measure credit
portfolios successfully, issuers must take a more holistic view of their
customers, looking not only at their credit scores but also their past
payment history, credit line management, debt burden, cross-sale
potential and the duration of the customer relationship.

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Capital One US Card Delivers a $2.3B Q1 Profit

Capital One reported that its U.S card business delivered a $2.4 million profit in the first quarter. But, the U.S. Card charge-off rate increased to 8.4% for the first quarter of 2009, above the 8.1% charge-off rate expectation articulated in the fourth quarter of 2008. The company added $124.1 million to allowance for loan losses in anticipation of higher expected charge-offs in 2009. Allowance as a percent of reported loans increased 36 basis points in the first quarter of 2009 to 4.8%. The coverage ratio does not include the $9.5 billion of Chevy Chase Bank loans that were added to the balance sheet in the first quarter. Economic deterioration continued at a rapid pace during the first quarter, particularly in labor markets, driving increasing delinquency and charge-off rates across the company’s lending businesses, with the exception of Auto Finance. For complete details on Capital One’s first quarter performance visit CardData (carddata.com).

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SparkBase Becomes Class A-Certified

OH-based gift and loyalty program provider SparkBase has “Class A”-certified its processing application on Hypercom’s “Optimum M4230” mobile payment terminals. The certification enables gift, loyalty, and community rewards
transactions on the “Optimum M4230” to be conducted from virtually
anywhere on the SparkBase Network. SparkBase processes millions of transactions annually for merchants
in five countries. SparkBase uniquely offers its clients the ability to
private label stored-value programs on a state of the art network,
without involving a middleman.

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Circle K is Accepting MasterCard PayPass

C-store chain Circle K is now accepting MasterCard PayPass. The number of MasterCard PayPass cards and devices in market
has grown from nearly 13 million as of Q4 2006, to more than 23 million
as of Q4 2007, to more than 50 million as of Q4 2008. There are
more than 2,100 Circle K stores across the USA and over 4,000
international locations. Circle K is part of the Alimentation
Couche-Tard Inc. group of companies which is the leader in the Canadian
convenience store industry which
currently has a network of 5,444 convenience stores.

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GE Earnings Sink 40% in the First Quarter of 09

GE announced first-quarter 2009 earnings from continuing operations of $2.8 billion, down 40% from first quarter 2008. First-quarter 2009 revenues from continuing operations were $38.4 billion, down 9% year-over-year. Capital Finance earned $1.1 billion in the quarter and remains on track to be profitable for the full year.
On March 19, GE conducted a ‘deep dive’ into GE Capital that
demonstrated the strength of its team and its commitment to
transparency. Estimated stress-test results showed that it does not need
to raise additional capital even in the Fed’s adverse-case
scenario.

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FEB DEBT

Growth in credit card debt picked up in February, adding A$800 million.
Credit card volume also picked up but remains 2.3% lower than one-year
ago. Year-on-year credit card debt growth has slowed to 4.8%, compared
to 5% in the prior month and 10% one-year ago. According to the Reserve
Bank of Australia credit card balances hit A$45.4 billion in February
versus A$43.3 billion one-year ago. Credit limits now stand at A$124.2
billion, compared to A$116.1 billion in February 2008. According to the
Reserve Bank of Australia there are currently 14.4 million credit card
and charge card accounts in Australia, compared to 14.0 million one-year
ago.

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AmEx OPEN Survey Finds Good in the Recession

Results from the “American Express OPEN Small
Business Monitor” semi-annual survey indicate that four in ten
entrepreneurs feel the current economic environment
creates opportunities for their business. Small business owners are not
taking this recession lying down. Many are
finding new resources to tap and new ways to manage costs beyond the
traditional steps of laying off staff or cutting back on staff hours
with 45% of business owners open to bartering for new
products or services with customers or suppliers and 23% report their
barter activities have increased due to the economic
environment. Additional steps taken include: 48% that have instituted
hiring freezes; 30% are no longer taking a salary; 27% have a family
member working pro bono;
25% are renegotiating leases and supply contracts; 16% have cut benefits
and 18% work a second job.

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MOBILE PAYPASS

MasterCard Canada and partners Citi Cards Canada and Bell Mobility have
completed the first NFC trial of “Mobile PayPass” in Canada, the first
trial that used Bell Mobility’s wireless network, allowing
participants to make purchases using their mobile device at MasterCard
PayPass acceptance locations across Canada. The trial took place at Bell
Mobility’s Creekbank office in Ontario and approximately 75 employees
from Bell, Citi Cards and MasterCard participated. The average
transaction amount during the trial was just under $20. The four-month
closed trial was a major step towards bringing mobile payments to
Canadian mobile phone users.

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