MBNA’s January Metrics March Upward

The seasonal denominator effect pushed MBNA’s metrics upward in January. The nation’s third largest issuer posted managed credit card outstandings in January of $98.6 billion, about $3.3 billion lower than December. The managed consumer credit card delinquency ratio jumped up by 14 basis points, as charge-offs climbed 34 basis points during January. Delinquency for consumer credit cards increased to 4.34% during January, compared to 4.20% during December, and compared to a 2004 high of 4.49% in February. Charge-offs slipped upward to 4.46% in January, compared to 4.12% for December. In May, MBNA’s charge-off rate was 4.88%, the high for the year. MBNA recently reported that domestic credit card loans declined 4.6% from one-year ago to $80.2 billion. For complete details on MBNA’s fourth quarter results and monthly metrics, visit CardData ([www.carddata.com][1]).

MBNA CONSUMER CREDIT CARD SNAPSHOT
Month Outstandings Charge-offs Delinquency
Jan 04 $103.1b 4.77% 4.34%
Feb 04 $ 99.6b 4.71% 4.49%
Mar 04 $ 99.1b 4.79% 4.27%
Apr 04 $ 98.0b 4.70% 4.21%
May 04 $ 98.5b 4.88% 4.15%
Jun 04 $ 99.4b 4.64% 4.10%
Jul 04 $ 99.5b 4.52% 4.00%
Aug 04 $ 99.7b 4.52% 4.01%
Sep 04 $ 98.8b 4.22% 4.15%
Oct 04 $ 98.5b 4.36% 4.18%
Nov 04 $ 99.9b 4.33% 4.21%
Dec 04 $101.9b 4.12% 4.20%
Jan 05 $ 98.6b 4.46% 4.34%
Source: CardData (www.carddata.com)

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

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Pay By Touch Sues BioPay Over Patents

San Francisco-based Pay By Touch has filed a patent infringement suit against BioPay over Pay By Touch’s ‘042 patent covering tokenless biometric transactions and Pay By Touch’s ‘397 patent covering biometric check-cashing services. The suit was filed in federal district court in Wilmington, DE, in partial response to BioPay’s recent request to the court for a declaration that Pay By Touch’s patents are not being infringed. Pay By Touch is a free consumer payment service that allows shoppers to pay for purchases and cash checks using a finger scan linked to their financial accounts and loyalty programs.

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TEEN CARD

Citibank has launched a credit card for 13-19 year olds offering a credit limit up to AED 500 (US$136). The new “Citibank Teen Card MasterCard” requires no application form since it is issued as a supplementary card to existing credit card holders. The new card also offers shopping discounts at a wide range of UAE merchants. Citibank currently dominates UAE’s credit card market and is a major provider of consumer credit services including personal and auto loans. Last year, Citibank won the regional “Credit Card of the Year Award” from the GCC Banking Awards 2004 program run by Banker Middle East Magazine.

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Anti-Phishing Network Launched by Major Players

Microsoft, eBay, PayPal and VISA have teamed with Texas-based WholeSecurity to launch the “Phish Report Network.” The network allows any company being victimized by phishing attacks to immediately and securely report fraudulent Web sites to a central database operated by WholeSecurity. Other companies subscribing to the “Phish Report Network” can then access the database or receive real-time notifications of known phishing sites, enabling them to more effectively protect consumers by blocking these sites in their user-facing security applications.

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OPC and the IRS May Expand Prior Year Tax Acceptance

Official Payments Corp, which enables the payment of federal taxes and tax obligations in 25 states and the District of Columbia, is working with the IRS to expand acceptance of payments for prior year taxes. All taxpayers can take advantage of the convenience, rewards and cash management benefits of OPC’s service, including paper filers, electronic filers, those who use tax-preparation software and those whose returns are prepared by accountants. Rewards programs vary depending on credit card companies’ rules and consumers should check with their card issuer for details. Official Payments Corp is a wholly owned subsidiary of Tier Technologies, Inc., a leading provider of transaction processing and packaged software and systems integration services for public sector clients.

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CO-OP Network Names a New Network Services SVP

The CO-OP Network has named Kimberly Phillips Hester, formerly VP/COO of Texas-based Community CU, as SVP of Network Services. Hester, a Cal Poly Pomona graduate, began her executive career at LAPCU in 1988, where she ultimately became CEO. In 1995, she moved to CCU and in 2001 received her Masters of Business Administration from the University of Texas. CO-OP Network (www.co-opnetwork.org), established in 1981 and located in Ontario, Calif., is wholly-owned by its credit union shareholders and provides volume discounts on products and services that include risk management as well as debit and deposit access.

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Volume Rises 11% Among Top Issuers; Nears $1.2T

Gross dollar volume among the top five U.S. issuers grew 11.1% last year to nearly $1.2 trillion. American Express led the pack with a 16%+ gain, while Discover squeezed-out a paltry 1.7% increase in purchase and cash advance volume. MBNA, which posted a decline in domestic outstandings in 2004, posted an 11.9% increase in global gross dollar volume. Citi and Chase posted GDV gains of 9.5% and 10.5%, respectively. For complete details on gross dollar volume by the top U.S. issuers visit CardData ([www.carddata.com][1]).

TOP FIVE GROSS DOLLAR VOLUME HISTORICAL

RANK/ISSUER YTD 2004 YTD 2003 CHANGE
1. AmEx $ 304.8 billion $ 262.1 billion +16.3%
2. Citi $ 301.9 billion $ 275.7 billion + 9.5%
3. Chase $ 283.8 billion $ 256.8 billion +10.5%
4. MBNA $ 206.2 billion $ 184.3 billion +11.9%
5. Discover $ 99.6 billion $ 97.9 billion + 1.7%
TOTAL: $1196.3 billion $1076.8 billion +11.1%
Notes: AmEx is U.S. billed business only; Citi includes
some non-US cards in North America; Chase is recast with Bank
One data; MBNA includes international volume; Discover includes
a small portion of international data. Source: CardData
(www.carddata.com)

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

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Bankruptcy Reform in Play for the 11th Time

A streamlined bankruptcy reform bill, “S.256,” is likely to pass the Senate Judiciary Committee very soon. The Committee will mark-up the bill on February 17th. Last week was the 11th Senate hearing since 1998 on the bill and the Committee has taken no action on it since 2001. A recent study showed that roughly half of all bankruptcies are related to unpaid medical bills. The study has prompted three U.S. senators to call for changes in the bill.

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Online Credit Card Marketing Begins to Heat Up

Research conducted by Keynote Systems, Inc. has found competition to acquire credit card customers online has heated up over the past few months. The study found that prospective customers visiting the Bank One site were 11% more likely to apply for a card online now than they were just six months ago, when the last Keynote study of prospective credit card customers was conducted. Prospective customers visiting the Citibank site were 19% more likely to apply for a card now than they were just twelve months ago. Keynote reports that Discover and American Express provide the best online experience for consumers as measured by the overall Keynote rankings, but the five leading card sites are closely grouped together in terms of customer experience appeal. Discover, MBNA and American Express were rated as having the best online application processes. Keynote found that most consumers (53%) start their search for a credit card at a search engine and then follow a link to a specific credit card or bank site, 47% type in a bank or credit card company’s URL directly into their Internet browser. 60% of consumers use a search engine at some point in their search and evaluation process, with Google, Yahoo! and MSN being the top search destinations.

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FTC Offers Consumers an International ADR Directory

The FTC and consumer protection agencies worldwide have opened “The International Alternative Dispute Resolution Directory” to help consumers resolve problems with foreign sellers. The directory was unveiled today on econsumer.gov, a joint Web site operated by consumer protection agencies in 20 countries. When consumers file cross-border fraud complaints on econsumer.gov, they reach all the participating agencies simultaneously. This enables international law enforcers to cooperate on investigations, share information and fight fraud more efficiently. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them.

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Sears to Restate Cash Flows from Card Operations

Sears announced the company is filing amended SEC documents to correct an error related to the classification of cash flows generated in connection with the company’s domestic credit card business, which was divested in November 2003. Sears noted that the change does not affect the results of operations, net income, financial condition or net changes in cash and cash equivalents for any of the periods presented. The domestic credit card business and related receivable portfolios consisted primarily of the proprietary “Sears Card” and “Sears Gold MasterCard.” Historically, the company presented the aggregate cash flows generated from both the “Sears Card” and “Sears Gold MasterCard” as cash flows from operating activities in the consolidated statements of cash flows. As a result of the discussions with the SEC, the company has changed the classification of cash flows from the “Sears Gold MasterCard” portfolio from operating activities to investing activities within the consolidated statements of cash flows, as the loans generated were predominantly related to activities external to Sears’ merchandise and services. Sears also announced a restatement for the fourth quarter to correct its accounting for the amortization of construction allowances.

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Providian’s Metrics Post Sharp Declines in Jan

Providian’s managed charge-off rate declined 144 basis points, while its 30+ day delinquency ratio dropped 55 basis points, during January, compared to the prior month. Over the past thirteen months, Providian’s managed charge-off ratio has plummeted nearly 600 basis points, and managed delinquency has collapsed by more than 350 basis points. However, losses for Providian’s credit card ABS edged up slightly by 2 bps in January, as delinquency edged down by 5 bps. On a managed basis, charge-offs for January came in at 8.54% while delinquencies came in at 5.61%. During January, Providian’s managed credit card portfolio seasonally contracted by $300 million to $18,198,593,000. The Company’s managed 30+ day delinquency rate at the end of the fourth quarter was 6.16%, compared to 6.27% at the end of the third quarter. The managed net credit loss ratio for the fourth quarter was 9.98%, compared to 10.39% in the third quarter. For complete details on Providian’s latest performance, visit CardData ([www.carddata.com][1]).

PROVIDIAN MONTHLY ABS METRICS
Month Charge-Offs Delinquency
Jan 04 17.36% 11.48%
Feb 04 16.08% 11.07%
Mar 04 17.17% 9.56%
Apr 04 15.84% 9.09%
May 04 14.82% 8.68%
Jun 04 14.44% 8.40%
Jul 04 13.17% 8.42%
Aug 04 12.39% 8.37%
Sep 04 12.45% 8.30%
Oct 04 12.11% 8.48%
Nov 04 12.14% 8.27%
Dec 04 11.73% 8.06%
Jan 05 11.75% 8.01%
Source: CardData(R) (www.carddata.com)

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

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