GPN 4Q/02

Global Payments reported that revenue for the quarter ending November 30th grew 12% to $129.5 million. Net income for the quarter grew 17% to $13.6 million compared to $11.6 million in the prior year. For the six months ended November 30th, revenue grew 14% to $257.2 million compared to $226.6 million in the prior year. Organic revenue grew approximately 8% to $245.7 million. GPN says it expects to achieve fiscal 2003 full year guidance of $495 million to $514 million in revenue. For complete details on Global Payments latest performance visit CardData ([www.carddata.com][1]).

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

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Charge-Off Outlook

The regulatory scrutiny of credit card issuers this year along with the continued malaise of the U.S. economy are seen as key factors indicating that bankcard charge-offs will not begin to show sustainable improvement until the economy gets better traction during the second half of 2003. That conclusion was drawn yesterday by Standard & Poor’s Ratings Services. S&P says the weak consumer is likely to raise the losses for the credit card industry going forward. While the worst may be over, (charge-offs have declined from a record 7.6% in March to 6.5% in October), the unemployment rate is still creeping higher, and charge-offs are likely to rise further before finally falling later next year. Charge-offs are likely to move back above 7% in the first quarter 2003. S&P notes the two bright spots for the credit card industry are the relatively high levels of excess spread and stable payment rates.

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ContactMail v2.1

Experian has released the v2.1 of its “ContactMail” e-mail delivery and management solution that now offers increased reporting features and improved campaign management solutions. To complete the package, ContactMail’s conversion tracking features and web-based activity reports offer marketers the most efficient means to monitor and evaluate the success of their e-mail marketing efforts.

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Discover 4Q/02

Morgan Stanley reported this morning that profits for its Credit Services or Discover card division grew 9% during fiscal 2002 to $767 million, while profits for the fourth quarter, ending November 30th, were up 1% to $194 million. Discover card portfolio receivables increased a modest 3.7% during the year to $51.1 billion; however, fourth quarter transaction volume soared 14.5% to a record $25.3 billion, as a result of higher balance transfers and an increase in sales volume, presumably driven by Discover’s aggressive 0% APR offers. The 4Q/02 credit card net charge-off rate was 5.96%, 6 basis points lower than the third quarter, but 11 basis points higher than a year ago. Morgan Stanley says the increase in the charge-off rate from fourth quarter 2001 was largely the result of an increase in bankruptcy losses. During the fourth quarter, Discover added 300,000 net new accounts, but active accounts continued to decline. Discover active accounts are down 13% from one year ago. The interest rate spread on Discover’s credit card portfolio contracted by 20 basis points compared to last year’s fourth quarter, driven by a lower finance charge yield which more than offset a decline in the cost of funds. For complete details on Morgan Stanley/Discover’s fourth quarter performance visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
4Q/01* 1Q/02* 2Q/02* 3Q/02* 4Q/02* Y/Y CHNG
Receivables: $49.3b $49.6b $49.4b $49.7b $51.1b +3.7%
Volume: $22.1b $24.1b $23.5b $24.3b $25.3b +14.5%
Accounts: 45.7m 46.0m 46.2m 46.2m 46.5m +1.8%
Actives: 24.0m 23.8m 23.4m 22.8m 22.6m -5.8%
Chargeoffs: 5.85% 6.49% 6.30% 6.27% 5.96% +1.9%
Delinquency: 6.85% 6.75% 5.63% 5.72% 5.96% -13.0%
Yield: 13.48% 12.63% 12.64% 12.71% 12.45% -7.6%

4Q/01 fiscal quarter ended 11/30/01; 1Q/02 ended 2/28/02; 2Q/02 ended
5/31/02; 3Q/02 ended 8/31/02; 4Q/02 ended 11/30/02.
Source: CardData (www.carddata.com)

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

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Card Outlook

The growth in the U.S. card manufacturing market may be flat in 2003 as many issuers postpone smart card deployments for at least another year. Oberthur Card Systemsâ¤_ North American division says banks will opt for translucent plastics and imaginative shapes and forms instead of advanced chip cards. However, identification and security applications will be the growth opportunity for the smart card industry, with the U.S. Government leading the way in the adoption of advanced logical and physical access systems.

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USWD & Pepsi

U.S. Wireless Data has received trademark authorization from Pepsi-Cola North America for its wireless credit card processing solution for vending machines. The trademark authorizes USWD’s “Synapse Enabler” for deployment by Pepsi’s bottling partners in their vending machines. USWD says the solution earned authorization after nearly two years of development and testing in various locations.

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DIRECT ENERGY AIR MILES

Centrica plc’s Direct Energy unit has signed a multi-year agreement to
participate as a “Sponsor” in the Canadian “AIR MILES Reward Program”
offering households in Ontario and Manitoba the opportunity to earn reward
miles for their natural gas usage. The “AIR MILES” program was created and
is operated by The Loyalty Group, an Alliance Data Systems subsidiary. More
than 12.5 million Canadians actively collect “AIR MILES” at more than 100
brand-name sponsors representing over 12,000 retail and service locations
across Canada.

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