Providian’s Charge-Offs Resume a Decline

Losses for Providian’s credit card ABS dropped by 41 basis points in December, and delinquency edged down by 21 basis points. Since the start of this year, delinquency has collapsed by 342 basis points, and charge-offs have declined 563 basis points for the issuer’s card bonds. Charge-offs decreased to 11.73% in December, compared to 12.14% during November. One-year ago, Providian’s securitized charge-off ratio stood at 17.55%. Delinquency ticked down to 8.06% during December compared to 8.27% during November. One-year ago, Providian’s securitized delinquency ratio stood at 11.94%. Providian will release its managed charge-off and delinquency data with its fourth quarter earnings report on January 20th. 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%
Source: CardData(R) (www.carddata.com)

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

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GE MasterCard Enters the Canadian Market

GE Consumer Finance-Canada has purchased the small business MasterCard portfolio in Canada of First Data Loan Company Canada. Under terms of the agreement, First Data will provide card processing services for the accounts. The deal marks GE’s first entry into the Canadian market. First Data says it unloaded the portfolio to continue to focus on its core competency.

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NOVA to Process for 900+ SHOE SHOW Stores

NC-based SHOE SHOW is implementing NOVA’s credit and debit card processing services throughout its 918 stores operating in 33 states. SHOE SHOW, Inc.’s success has been based on a simple formula of providing quality products, service and value. Over the past forty years SHOE SHOW, Inc. has continued to grow with stores named SHOE SHOW, the SHOE DEPT, and Burlington Shoes. NOVA Information Systems, a leader in the payment processing industry, is a wholly owned subsidiary of U.S. Bancorp. NOVA partners with financial institutions, independent sales organizations, associations, government agencies and community banks to offer integrated payment processing services to their merchants and retailers.

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Pay By Touch Expands Acceptance

San Francisco-based Pay By Touch has inked a marketing alliance with Certegy, and is expanding its service for Piggly Wiggly stores. The Certegy alliance will enable Pay By Touch users, for the first time, to cash government and payroll checks at Pay By Touch merchant locations across the USA using the Pay By Touch finger scan technology along with Certegy’s “Paycheck Accept Verification and Check Guarantee” services. Meanwhile, all Piggly Wiggly shoppers in South Carolina and Southeast Georgia will soon be able to pay for their groceries with Pay By Touch. After a six-month pilot, Piggly Wiggly says it will launch Pay By Touch company-wide to all of its corporate-owned grocery stores by May. Piggly Wiggly has a total of 120 stores.

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Ingenico and IBM Ink a Marketing Partnership

Ingenico has formed a marketing partnership with IBM, wherein Ingenico will supply payment terminals and transaction acceptance technology for IBM’s “Retail Store Solutions” organization within the USA. The solutions have been integrated and are designed to work seamlessly together to provide optimal customer payment acceptance. INGENICO is the world’s largest provider of secure payment and transaction systems used by banking, retail, petroleum, transportation, healthcare and governments to ensure the secure acceptance and flow of electronic commerce.

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MBNA Earns the Fortune Employers Hall of Fame

MBNA has been named to Fortune magazine’s “Hall Of Fame” after eight consecutive years as one of the best places to work in the USA. MBNA becomes the first financial services firms to ever make the list. They are also one of only 22 companies to have appeared on the magazine’s list of “100 Best Companies to Work For” since the list’s inception in 1998. The magazine cited MBNA for its benefits, child-care centers, generous tuition reimbursement, and adoption assistance program. MBNA drew particular praise for its generous maternity leave and was also cited for allowing new grandparents an extra week’s vacation to become acquainted with new grandchildren. In addition to honors in the United States, Fortune also named MBNA Ireland as one of the “10 Great Companies to Work For in Europe.”

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NOV 04 DEBT

Credit card outstandings rose GBP 500 million during November to bring total card loans to GBP 57.6 billion, a slight gain over last year’s pace. Total net lending to consumers for November hit GBP 183 billion, an increase of GBP 1.4 billion over October. Overall, consumer credit grew 0.8% in November, seasonally adjusted, GBP 100 million weaker than the increase in October. The three-month (annualized) growth rate fell to 10.4% from 11.7% in October while the twelve-month growth rate fell to 11.7% from 11.8% in October. Gross advances were GBP 18.8 billion, GBP 200 million higher than the average three months to October. The Bank of England continues to maintain its benchmark interest rate at 4.75%.

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Monolines ROA Up 18 bps; CUs Slip 5 bps in 04

Credit card profits among monolines and banks rose significantly in 2004 as the average pre-tax ROA for credit union issuers fell slightly. Pre-tax card profits at monolines last year came in at 4.43% compared to 4.60% for banks. However, monolines, in real dollar earnings, not ROA percentages, still have the lion’s share of industry earnings, as they have held for many years. According to data compiled by R.K. Hammer Investment Bankers, pre-tax card profits at monolines last year rose 18 basis points while banks increased 7 basis points. Credit Unions delivered a pre-tax ROA of 1.00%, compared to 1.05% for 2003.

CREDIT CARD PRE-TAX ROA (%)
1998 1999 2000 2001 2002 2003 2004
Monolines: 4.61 5.59 4.56 3.23 3.83 4.25 4.43
Banks: 2.50 3.16 3.65 4.00 4.28 4.53 4.60
CUs: 0.90 0.95 1.10 1.00 1.10 1.05 1.00
Source: R.K. Hammer Investment Bankers

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Paymentech Certifies SLIM CD Payment Software

FL-based SLIM CD announced that its software has been certified on the Paymentech platform, supporting both card-swipe and keyed transactions. Transactions are generally processed in 2-5 seconds through Slim CD’s NetConnect connectivity to Paymentech, without requiring the merchants to have a leased line or dedicated Internet connection. The Slim CD package includes a desktop application, virtual terminal, and a choice of shopping carts. SLIM CD specializes in credit card processing software development for the desktop and the Internet.

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Arthur Blank Ranked as Top Gift Card Manufacturer

Boston-based Arthur Blank & Co. has been ranked as the leading manufacturer of non-bank, card marketing, and payment solutions. The “Nilson Report” ranked ABCO as #1 in their December report. Total gift card sales for the industry in 2004 reached $48 billion, up $6 billion from the year prior, and the TowerGroup projects total retail-based gift card sales topping $53 billion in 2005.

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Huntington Switches from Chase to MBNA

OH-based Huntington Bancshares has switched its agent credit card contract from Chase to MBNA and will now offer “WorldPoints” on a “Preferred,” “Platinum,” or “Quantum” VISA or MasterCard.” Prior to the alliance with MBNA, Chase Manhattan Bank USA had served as Huntington’s consumer and business card provider. Huntington Bancshares Incorporated is a $32 billion regional bank holding company headquartered in Columbus, Ohio.

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0% Card Offers Into 2006 Remain Popular

U.S. card issuers are continuing to offer 0% interest rates. Some top issuers are now offering 0% interest rates on purchase and balance transfers through April 2006, according to CardWatch (www.cardwatch.com). However, most of these offers are only available via the mail. Chase is offering 0% on purchases and balance transfers through April 06, on one of its “Platinum MasterCard” products. Chase is also waiving the fee for balance transfers with the offer. Citibank is offering a 0% rate on balance transfers though next April on its “Diamond Preferred MasterCard.” However, the 0% rate will expire in January 2006 unless you charge at least $100 in the first three months of the issuance, and “do not default under any card agreement.” Bank One’s (now Chase) “Reader’s Digest Platinum MasterCard’ is also offering a 0% rate on balance transfers and new purchases through next April. Other major issuers, such as Providian and U.S. Bank, also have 0% offers running into 2006, according to CardWatch ([www.cardwatch.com][1]).

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

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