Sears 3Q/02

The Sears “Gold MasterCard” topped $10 billion in outstandings during the third quarter. More than 28 million consumers now carry the Sears bank credit card compared to 17 million on year ago. Outstandings for the Sears retail credit card declined to $18.5 billion compared to $23.2 billion one year ago. Overall, Sears’ Credit and Financial Products unit had operating income of $284 million, down 28% compared to the prior year. Revenues for the division increased 4% from a year ago to $1.4 billion, due primarily to higher average receivable balance growth. The net charge-off rate for the quarter decreased to 5.55% from 5.62% last year, reflecting increased charge-offs offset by the effect of receivables growth. Year-over-year delinquencies declined 17 basis points from 7.41% to 7.24%. The domestic allowance for uncollectible accounts of $1.6 billion is 5.57% of ending credit receivables, compared with 5.10% at the end of last quarter. For complete details on Sears’ third quarter performance visit CardData ([www.carddata.com][1]).

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

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MBNA 3Q/02

The suspense over MBNA’s third quarter earnings report ended yesterday without much fanfare. Due to the new FFIEC guidance, MBNA took a $167.2 million after-tax charge, pushing down profits. Third quarter net income came in at $398.0 million, a 16.8% decline from 3Q/01. For the first time, MBNA crossed the $100 billion milestone in outstandings, a $2.8 billion increase over the second quarter. During the third quarter MBNA signed up 86 new affinity and co-branded agreements, and renewed more than 250. MBNA added 4.3 million new cardholders and 3.5 million new accounts during the third quarter. Managed charge-offs for the third quarter were 4.84% compared to 5.09% in the second quarter. Delinquency (30+ days) stood at 4.79% for 3Q/02, compared to 4.90% one year ago. Volume was $41.7 billion, a 16% gain over last year. MBNA’s net interest margin has been shrinking this year, hitting 7.66% for the third quarter, despite a re-pricing campaign launched this summer. For complete details on MBNA’s third quarter performance visit CardData ([www.carddata.com][1]).

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

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Bank One Branding

Bank One is officially burying the First USA brand name with a new ad campaign that starts tomorrow. The campaign will start with a series of 30-second television commercials scheduled to begin airing during Game One of the World Series. Bank One will spend $25 million in the fourth quarter alone to nationally advertise the array of credit card options now available from Bank One. The ads, which feature actual customers rather than actors, highlight the wide range of reward and affinity cards available through partnerships with 1,200 corporate brands, institutions and non-profit organizations. New York advertising agency The Gardner-Nelson Project developed the campaign.

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SchlumbergerSema 3Q/02

SchlumbergerSema reported that operating revenue of $896 million in the third quarter increased 6% year-on-year and 5% sequentially despite the weak IT spending environment. Pretax operating income of $20 million, before charges, declined 8% year-on-year but doubled sequentially due to continuous cost-containment efforts and improved margins in the UK GeoMarket. However, prices continued to weaken. To adapt to the slower growth environment, the cost reduction program continued during the quarter resulting in a pretax operating charge of $16 million ($12 million after tax) for employee severance costs. Volume products revenue of $210 million experienced strong year-on-year and sequential growth of 10% and 5% respectively. This improvement reflected an all-time record volume of mobilecom cards, higher demand in the banking card segment, and sustained activity in banking and parking terminals. Pretax operating income of $9 million improved 42% sequentially, mainly attributable to better productivity in smart cards and terminals. For complete details on SchlumbergerSema’s third quarter performance visit CardData ([www.carddata.com][1]).

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

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RBA FEE FIGHT

VISA and MasterCard argued in The Federal Court of Australia last week
that it may take up to six weeks to present their case against the Reserve
Bank of Australia over new credit card laws pertaining to merchant fees.
The Court has set a trial date of May 5th but will hold related hearings on
November 18 and April 18. The card associations argue that the Reserve Bank
of Australia hasn’t complied with its obligations under the Payment Systems
Act, and that the proposed changes don’t meet the public-interest test
required under the act. In August, the Reserve Bank of Australia released
its final reforms on credit card programs which include dropping average
interchange fees by 40% and lifting the restriction imposed by credit card
programs which prevent merchants from recovering from cardholders the costs
of accepting credit cards. Under the new RBA rules, interchange fees will
decrease from around 95 basis points to approximately 55-60 basis points by
July 1, 2003. The Reserve Bank’s standard on merchant pricing will come
into force on January 1, 2003. The RBA also announced an end to
restrictions imposed by credit card networks which limit the entry of new
competitors. Specialist credit card institutions authorized and supervised
by the Australian Prudential Regulation Authority will now be eligible to
apply to participate in credit card programs. All the reform measures will
apply to the credit card networks operated in Australia by Bankcard,
MasterCard and VISA, which were formally designated by the Reserve Bank as
payment systems subject to its regulation under the Payment Systems
(Regulation) Act 1998. American Express and Diners Club have each indicated
to the Reserve Bank that they will remove their restrictions on merchant
pricing.

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