BofA Managed Credit Card Loans Up 14% in Q2

Bank of America’s credit card loans grew 14% in the second quarter ending with $59.3 billion. The issuer opened a record 1.6 million new credit card accounts during the quarter as pre-tax card income hit $414 million. Second quarter charge-offs were 6.23%, compared to 6.17% in the prior quarter, and 5.88% one year ago. BofA says the increased charge-offs reflected growth and seasoning in the portfolio, the impact of last year’s changes in minimum payment requirements and bankruptcy reform. The managed 30+ day delinquency was 4.25%, compared to 4.20% in the first quarter and 3.86% for 2Q/04. Managed 90+ day delinquency was 1.96%, compared to 2.10% in the first quarter, and 1.76% for 2Q/04. BofA also reported that its merchant acquiring business handled $84.3 billion in processing volume during the second quarter on total transactions of 1.8 billion. Additionally, the issuer noted that debit card purchase volume rose to over $35 billion in the quarter, an increase of 27% from second quarter 2004. For complete details on Bank of America’s 2Q/05 performance, visit CardData ([www.carddata.com][1]).

BOFA CARD LOAN HISTORICAL
2Q/03: $30.8 billion
3Q/03: $33.6 billion
4Q/03: $36.6 billion
1Q/04: $37.3 billion
2Q/04: $52.0 billion
3Q/04: $55.4 billion
4Q/04: $58.6 billion
1Q/05: $57.9 billion
2Q/05: $59.3 billion
Source: CardData (www.carddata.com)

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

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NRF Lauds the Second Interchange Lawsuit

The National Retail Federation said Friday it welcomed the new lawsuit filed against VISA by grocers and drug stores over credit card interchange rates charged to merchants, saying it will help focus attention on the “hidden tax” for consumers. The lawsuit alleges monopolistic practices on the part of Visa, price fixing and illegally tying products and separate network services and contends that Visa’s association rules have restrained merchants’ ability to negotiate lower interchange fees. The National Retail Federation is the world’s largest retail trade association.

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Major Grocers/Drugstores Sue VISA Over Fees

Kroger, a major grocery chain, and six other major merchants yesterday filed a federal lawsuit against VISA over its interchange fee practices. The lawsuit alleges horizontal price fixing by VISA and its members in the setting of interchange rates and charges VISA with creating and imposing rules and restrictions that preclude merchants from being able to negotiate lower fees. Kroger says credit and debit interchange fees have increased 11 times over the past five years and currently cost the firm about $350 million annually. Kroger noted that in 2003, for the first time ever, electronic payments comprised more than 50% of Kroger’s sales. Today, over 60% of Kroger’s overall transactions are made via credit or debit cards. Joining Kroger in the lawsuit are Ahold, Albertson’s, Eckerd, Maxi Drug, Safeway, and Walgreen. MasterCard was not named in yesterday’s lawsuit filed in U.S. District Court, Southern District of New York. A copy of the lawsuit is available via CardFlash Online ([www.cardflash.com][1]).

[1]: http://cardflash.com

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RBC July CASH Index Shows Increasing Pessimism

The “RBC CASH Index” for July dropped to its lowest level since October 2003 amid consumer worries over rising gas prices, the London terrorist attack and a drop in job security. The Index stands at 73.9, down from 84.0 one month ago. This decrease drops consumer confidence to the lowest point in 2005. The RBC CASH Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal financial situations, savings and confidence to make large investments. Royal Bank of Canada offers diversified financial services.

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FDC Income Falls 16% with Weak Revenue Growth

First Data reported this morning that second quarter net income dropped by 16% as total revenues increased a weak 3%, year-over-year. However, Payment Services gross revenue climbed 15%, driven again by strong performance in its consumer-to-consumer money transfer business. Overall 2Q/05 revenues were $2.612 billion and overall income was $391.9 million. Payment Services operating profits fell 1% to $339 million during the second quarter on revenues of $1089 million. Revenue for the Merchant Services segment was up 3% to $1024 million with operating profit of $238 million, unchanged over the year ago quarter. Card Issuing Services’ revenue was flat at $598 million and operating profit was down 12%, compared to 2Q/04. North America merchant transactions were up 13% to 5.8 billion while issuer transaction rose 5% to nearly two billion for the second quarter. As of June 30th, accounts on file were 419.5 million domestic and 32 million international. Of the 451.5 million card accounts on file, 110.7 million were bank card accounts, 243.4 million were retail accounts and 97.4 million were debit accounts. For complete details on FDC’s second quarter performance, visit CardData ([www.carddata.com][1]).

FDC NET INCOME
2Q/04: $466.0 million
3Q/04: $460.6 million
4Q/04: $465.1 million
1Q/05: $374.5 million
2Q/05: $391.9 million
Source: CardData (www.carddata.com)

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

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TransUnion Names a New VP/Corporate Strategy

TransUnion has promoted ten-year veteran Cathy Madden to VP/Corporate Strategy. Madden will be responsible for working with TransUnion leaders across the enterprise to identify, develop and prioritize cross-divisional business opportunities. Most recently, she served as vice president of Business Planning for U.S. Information Services. She holds a Master of Science in mathematics from Illinois State University and a Bachelor of Science in mathematics from Iowa State University. TransUnion offers a broad range of financial products and services that enable customers to manage risk.

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Taxes and Home Price Slowdown Slow Spending

Deloitte Research’s “Leading Index of Consumer Spending” has found that the rising tax burden and continued slowdown in home price growth will put pressure on consumer spending during the upcoming back-to-school retail sales season. The index, comprising four components — tax burden, initial unemployment claims, real wages and real home prices — fell in June to 3.81 percent, from a downwardly revised gain of 3.95 percent in May.

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GECF Revenues Climb 29%, Nears $5B Quarterly

GE reported that profit for its Consumer Finance unit climbed 23% in the second quarter to $735 million year-over-year, but unchanged sequentially. Second quarter GECF revenues hit a record $4.9 billion, a 29% increase over 2Q/04. GECF posted first quarter revenues of $4.7 billion. During the quarter, GECF formed an alliance with Caja de Ahorros del Mediterraneo in Spain and acquired a significant stake in BAC International Bank, a privately held retail bank and credit card issuer with 178 branches in six Central American countries. The Company also inked a five-year extension of its agreement with Tesco in Thailand for the Lotus Dual Card and signed two major co-branded card deals in India, including the “LG Electronics Loyalty Card.” In the USA during the second quarter, GECF announced plans to launch a new credit card for Bass Pro Shops and signed a multi-year agreement with Lennox to provide a consumer financing program including the “Home Climate” private label credit card. For complete details on GE’s second quarter performance, visit CardData ([www.carddata.com][1]). (CF Library 5/26/05; 6/3/05)

GE CONSUMER FINANCIAL TRACK RECORD
Income Revenues
2Q/04: $600 million $3830 million
3Q/04: $681 million $4011 million
4Q/04: $637 million $4304 million
1Q/05: $735 million $4689 million
2Q/05: $735 million $4928 million
Source: CardData (www.carddata.com)

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

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Citi to Lose its #2 Executive by September

Citigroup late yesterday announced that its President, COO, and Board member, Robert Willumstad, will be leaving by September. Willumstad, disappointed with not receiving the CEO position to succeed Sanford Weill, says he wants to pursue opportunities to become a chief executive of a public company. Willumstad was named President of Citigroup in 2002, and joined its Board of Directors in 2003; he became Citigroup’s Chief Operating Officer in October 2003. Willumstad was the Chairman and CEO of Citigroup’s Global Consumer Group from 2000 to 2003, where he led all consumer businesses, including credit cards, consumer finance, and retail banking. In addition, he had oversight of Citigroup’s consumer operations in Western Europe, Japan and Mexico. Willumstad is also Vice Chairman of the Global Board of Directors at MasterCard and has served on the Global Board of Directors and the MasterCard International board of directors since June 2002 and 1999, respectively. (CF Library 3/20/03)

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