ICMA & GOZNAK

The Perm Printing Factory of Goznak and Belgrade, Yugoslavia-based GrafoCard have joined the International Card Manufacturers Association as “Principal Members/Card Manufacturers.” Ampflwang, Austria-based Iroplastics Gesellschaft M.B.H. has also joined the ICMA as an associate member, or supplier. Based in Princeton Junction, New Jersey, ICMA is a non-profit association of plastic card manufacturers, personalizers and related industry participants. With more than 230 members globally, the ICMA acts as a clearinghouse for industry issues, including the production, technology, application, security and environmental issues of plastic cards.

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Discover 1Q/03

Morgan Stanley reported this morning that its credit services, or “Discover” card unit, posted first quarter earnings of $182 million, a 9% gain over the year-ago quarter. For the quarter ending February 28th, Discover’s managed credit card loans at quarter end rose 4.4% from a year ago to $51.8 billion. However, the interest rate spread contracted by 25 basis points over the same period, as a decline in the cost of funds was more than offset by a lower finance charge yield. Merchant and cardholder fees rose 4% to $547 million largely as a result of higher merchant discount fees from increased transaction volume. Charge volume rose 8% from a year ago to $26.1 billion. The net charge-off rate declined to 6.17%, 23 bps below a year ago. The Company’s continued focus on credit quality helped improve the contractual loss rate despite continued softness in the U.S. economy. The over-30-day delinquency rate improved 42 bps to 6.33%, and the over-90-day delinquency rate improved 17 bps to 2.95% from the same quarter of 2002. For complete details on Discover’s latest results visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
1Q/02* 2Q/02* 3Q/02* 4Q/02* 1Q/03 Y/Y CHNG
Receivables: $49.6b $49.4b $49.7b $51.1b $51.8b +4.4%
Volume: $24.1b $23.5b $24.3b $25.3b $26.1b +8.3%
Accounts: 46.0m 46.2m 46.2m 46.5m 46.5m +1.1%
Actives: 23.8m 23.4m 22.8m 22.6m 22.3m -6.3%
Chargeoffs: 6.40% 6.30% 6.27% 5.96% 6.17% -3.6%
Delinquency: 6.75% 5.63% 5.72% 5.96% 6.33% -6.2%
Yield: 12.63% 12.64% 12.71% 12.45% 11.78% -6.7%

1Q/02 ended 2/28/02; 2Q/02 ended 5/31/02; 3Q/02 ended 8/31/02; 4Q/02 ended 11/30/02; 1Q/02 ended 2/28/03. Source: CardData ([www.carddata.com][2])

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

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EDGAR DUNN EXPERT

Edgar, Dunn & Company has hired international cards and payments industry expert Nicholas L.A. Kennett as a director of EDC’s financial services practice in its London office. For the past seven years, Mr. Kennett has served in key managerial roles at the Commonwealth Bank of Australia, including Executive General Manager Retail Customer Services and General Manager, Cards & Financing Products. Mr. Kennett has served on key payments industry boards, including as a director of the MasterCard International Asia-Pacific Board and Maestro International/Debit Advisory Board; as a member of MasterCard International Operations Committee; as chairman of Bankcard Association of Australia; and as chairman of VISA Executive Committee of Australia.

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CAP ONE PROFITS

US-based Capital One says its UK operations became profitable for the
first time last year. At the end of 2002, the U.K. Bank had 2.8 million
accounts and $3.9 billion in credit card, revolving loan, and installment
loan assets.The UK Bank has been operating independently in France since
2000. Cap One’s total international business had $5.3 billion of managed
credit card receivables. Besides the UK, the issuer also has operations and
activities in Canada, South Africa and France. Capital One’s global
subsidiaries collectively had 47.4 million accounts, and $59.7 billion in
managed loans outstanding as of December 31, 2002.

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GPN 1Q/03

Global Payments reported yesterday that revenue grew 8% to $124.6 million in the quarter ending February 28th, compared to $115.3 million in the year-ago quarter. Net income grew 18% to $12.1 million, compared to $10.3 million in the prior year. GPN says the revenue results were driven by its ISO and direct sales channels. GPN also says it continues to achieve improvements in operating income margin due to its acquisition integration efforts and cost reduction programs. The processor reaffirmed its fiscal 2003 annual revenue guidance of $495 million to $514 million. For complete details on GPN’s latest results visit CardData ([www.carddata.com][1]).

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

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Metris & OCC

Metris Companies and Direct Merchants Credit Card Bank confirmed Wednesday they have entered into an operating agreement with the OCC covering liquidity and capital maintenance provisions for the bank. Therefore, Direct Merchants existing formal agreement with the OCC, signed in April 2002, has been terminated. Metris also said yesterday it obtained an $850 million credit line from its bank groups.

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Bankruptcy Bill

It’s deja vu all over again as the U.S. House of Representatives passed bankruptcy reform legislation for the seventh time. In a vote of 315-113 the House passed H.R. 975 late Wednesday. The House also agreed to three significant amendments including an amendment to increase the look-back period on fraudulent transfers from one to two years. The other two amendments included one which requires courts to reinstate health benefits to employees that were changed by a corporate debtor within 180 days of filing. The third amendment will permit rescinding of certain corporate retention bonuses. The House defeated an amendment which sought to change the means test, based on IRS standards, to one based on the debtor’s actual expenses and income. The defeated amendment also included language relating to debts associated with abortion clinic protests. Several other amendments were also defeated. Republicans blocked six Democratic amendments from being offered by the Rules Committee, including one proposal to cap the exemption on home equity at $125,000. A total of 90 Democrats voted for H.R. 975. The bill now goes to the Senate, however, there is no indication it will be able to gather the necessary 60 votes to take a vote.

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MasterCard & Citigroup

MasterCard International announced this morning that the president of Citigroup and chairman/CEO of Citigroup’s Global Consumer Group will become vice chairman of its Board of Directors. Robert Willumstad succeeds Baldomero Falcones Jaquotot, chairman of Santander Central Hispano, who was elected chairman of the MasterCard Board at today’s meeting in Madrid. Willumstad has been a member of the board since 1999. Willumstad was named president of Citigroup in January 2002 and chairman and CEO of the Global Consumer Group in December 2000. He leads all of Citigroup’s global consumer businesses including Credit Cards, Consumer Finance, and Retail Banking.

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