BofA Q1 Credit Card Profits Plummet 39%

Bank of America reported that its Card Services division net revenue increased 21% to $7.33 billion due to 15% growth in net interest income and 33% growth in non interest income driven by 14% growth in average loans and leases, Card Services allocation of the VISA, Inc. IPO gain and higher card income. However, net income of $670 million was down 39% as the higher net revenue and the reversal of litigation costs related to VISA were more than offset by higher credit costs. Managed U.S. consumer and business credit card loans at the end of the first quarter was flat sequentially at $161.4 billion. First quarter U.S. Card Services charge-offs were 5.67%, compared to 5.03% in the prior quarter and 4.82% one-year ago. The managed 30+ day delinquency rose to 5.93%, compared to 5.70% in the fourth quarter and 5.45% for 1Q/07. Purchase volume for U.S. consumer and business cards was $56.8 billion for 1Q/08 compared to $64.7 billion for 4Q/07 and $55.4 billion for 1Q/08. BofA also reported that mobile banking recorded approximately 224,000 activations in the first quarter reaching 840,000 active customers. The “Keep the Change” program reached 8 million net new enrollments since inception, with 974,000 customers alone signing up in the first quarter. For complete details on Bank of America’s 1Q/08 performance, visit CardData ([www.carddata.com][1]).

BOFA EOP CARD LOAN HISTORICAL
(U.S Consumer & Business Cards)
1Q/07: $144.9 billion
2Q/07: $148.7 billion
3Q/07: $153.0 billion
4Q/07: $161.4 billion
1Q/08: $161.4 billion
Source: CardData (www.carddata.com)

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

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Decision-Makers Focus on Technology Purchases

MA-based Aite Group has released its report revealing over the next 2 years, mobile banking, e-mail communications and enhanced fraud detection are the most common types of applications large U.S. financial institutions will be engaging and/or replacing. Specifics of the research include findings of Aite’s survey of 23 U.S. financial institutions, conducted between January and March 2008, with 59% disclosing likelihood to deploy a mobile banking application and 41% likely to deploy a mobile bill payment application before 2011. Aite Group independent research and advisory firm studies business, technology and regulatory issues and their impact on the financial services industry.

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Small Biz Optimism Sinks to a 6-Year Low

OPEN from American Express “Small Business Monitor” has conducted research concluding 1/3 of small business owners are remaining focused on growth and hiring during the next 6 months amid a staggering economy. Optimism among these business owners is the lowest it has been in the 6 years AmEx has been conducting this research, despite the findings that 70% are planning on expanding business operations, while 44% cite economy and 16% cite homeland security as topics most important to the outcome of the next presidential elections. Additional findings of the survey show 86% of the businesses surveyed are experiencing financial impact from high energy costs, 35% have experienced disabled business as a result of energy costs and 33% have been forced to raise prices. Furthermore, 71% of entrepreneurs are concerned about retirement given current financial conditions, 52% are not convinced by the potential effectiveness of Bush’s Economic Stimulus Package and 41% are considering downsizing by cutting back on staff.

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CSI Introduces the Universal Fleet Fuel Card

Fleet maintenance provider CSI has issued the Universal Fleet Fuel Card to offer saving to cardholders. All members receive every benefit CSI has to offer, such as “Smart Buy”, a nationally updated database reporting fuel prices at filling stations in every city. Other benefits include real-time online reporting, allowing managers to track and analyze the spending of every card and driver as well as control the limits and types of spending, even changing restrictions to allow for non-fuel purchases such as maintenance. CSI Enterprises provides a specific line of controlled financial payment products including business fleet fueling/maintenance payment cards, a corporate virtual payment MasterCard and card solutions for corporate purchasing, travel and entertainment spending.

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FEB DEBT

Credit card outstandings rose in February by GBP 400 million to GBP
54.8 billion. This is the second consecutive month of growth following
several monthly declines in 2007. Year-on-year credit card outstandings
(not seasonally adjusted) are essentially flat. According to the The
Bank of England, the increase in net consumer credit in November was GBP
2.4 billion above the prior month and above the previous six-month
average. Net other loans and advances rose by GBP $2.0 billion, higher
than the January increase.

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Citi’s Q1 U.S. Credit Card Profits Drop 34%

Citigroup reported that 1Q/08 profits for its U.S. Cards unit declined 34% year-on-year to $595 million due to increased credit costs. For the first quarter Citi reported that credit costs increased $447 million, driven by higher net credit losses, up 23%, and a $302 million pre-tax charge to increase loan loss reserves. Higher credit costs reflected a weakening of leading credit indicators, trends in the macro-economic environment and an increase in the rate at which delinquent customers advanced to write-off. The managed net credit loss ratio increased by 120 basis points to 5.83%. GAAP revenues decreased 2%, reflecting the impact of higher funding costs and higher credit losses in the securitization trusts, partially offset by the gain on VISA shares. Excluding the gain on VISA shares and a gain on MasterCard shares in the first quarter, revenues were down 8%. Managed revenues grew 14%, reflecting the gain on VISA shares and a 6% increase in managed receivables. The managed net interest margin increased 3 basis points to 10.14%. Expenses decreased by 6%, primarily driven by a partial release of the VISA-related litigation reserve, offset by increased collection and servicing expenses. For complete details on Citigroup’s 1Q/08 performance, visit CardData ([www.carddata.com][1]).

CITIGROUP
U.S. Credit Card Net Income
1Q/07: $ 897 million
2Q/07: $ 726 million
3Q/07: $ 852 million
4Q/07: $ 398 million
1Q/08: $ 595 million
Source: CardData (www.carddata.com)

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

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WEBTRENDS ANALYTICS

CartaSi credit card and online payment provider has implemented
WebTrend’s “Analytics” for its online marketing. With this development,
WebTrends will provide CartaSi with a perspective on its progress with
online campaigns based on visitors’ behavior to determine which campaign
elements need improving as oppose to which elements are a waste of
resources and need to be eliminated altogether. The WebTrends
“On-Demand” solution was chosen by the Italian online payment provider
in the hope of increasing engagement/conversion rates by placing focus
on the analysis of visitors to the portal and immediate access to automatic
upgrades as needed. Gruppo CartaSi provides its services to 800 Italian
banks and 7 million business owners with a 24% Italian market share while
WebTrends provides Web analytics and online marketing solutions for
marketing campaigns and customer engagement.

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SYMCOR & SUNTRUST

Under undisclosed financial terms, Symcor financial transaction
processing and SunTrust Bank have signed processing agreements
stipulating the outsourcing of a portion of back-office banking
operations from the latter to the former for at least 10 years. Under
these arrangements, Symcor will be acquiring SunTrust’s check
clearing/lockbox processing/statement production, the SunTrust employees
across the American Southeast who currently conduct the said tasks and
the SunTrust operational facilities in those locations. SunTrust Banks
is headquartered in Atlanta, serves consumers across the Southeast, has
assets of $179.6 billion and total deposits of $117.8 billion while
Symcor Inc financial processing has headquarters in both Atlanta and
Toronto, Canada.

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Paperless Initiatives Gather More Steam

MA-based Aite Group has released findings of its report on paperless initiatives based on an October ’07 survey of 505 American professionals. In addition to regulatory initiatives recently proposed by the SEC to post mutual fund prospectuses online and supply only a “summary prospectus” in paper form of between two and four pages, saving the industry more than US$65 million annually in printing and postage, the research finds varying degrees of reception in different sectors, mostly positive. In financial services, cost is fundamental to paperless efforts, retail firms see paperless options as an opportunity to eliminate reams of paper stored in branches and, across all industries, paper customer correspondence is undervalued by recipients considering financial/environmental costs. Aite Group, LLC research and advisory firm focuses on issues impacting the financial services industry.

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United Bank Card Deploys 4Access Orion

NJ-based United Bank Card payment processor/merchant acquirer has deployed the 4Access “Orion” check reader/imager/card solution. The deployment of the “Orion” compact payment processing terminal offers an integrated solution for the bank’s merchant clients that facilitates processing for both checks and payment cards. This technology integrates MICR with optical character recognition to ensure accuracy. United Bank Card payment processor processes merchant accounts in 75,000 locations in excess of 6 billion dollars annually while IL-based 4Access Communications provides POS software and hardware to organizations across the country.

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KOTAK VISA

Kotak Mahindra Bank has launched its suite of VISA credit cards. The
new cards, which include 2 VISA Gold Cards, a VISA Platinum Card
and a VISA Signature Card, complete the Bank’s range of financial
services and have been designed to provide consumers with relevant
benefits, simplify credit and to provide a transparent communication of
charges. The card suite includes the “Trump” VISA Gold Card with no
fee and 10% cash back on annual purchases, the “Fortune” VISA Gold
Card also with no fee and up to 48 days interest-free cash withdrawals,
the “League” VISA Platinum Card, which charges a one-time fee and
provides auto-encashment of reward points earned, and the “Royale”
VISA Signature Card which charges a one-time fee for auto-encashment
of reward points earned, concierge and insurance services, a “Golf Fee
Card” for exclusive access to golf courses and a “Priority Pass” for access
to international airport VIP lounges.

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