After peaking in 1996, credit card profits continue to slip downward. According to CardData (www.carddata.com) net pre-tax profits dipped again last year by $100 million. While card industry profits more than doubled in the 90s they have declined over the past three years due to maximum competition, relatively high losses, and increasing convenience usage. The changing economic fundamentals produced a record number of acquisitions since 1996. Recently the nation’s second largest issuer, Bank One, advised Wall Street that its earnings for this year will not meet expectations due to lackluster results from its credit card unit, First USA.
CARD PROFITS (Net Pre-Tax) 1998 $11.4 billion 1993 $ 7.1 billion 1997 $11.5 billion 1992 $ 6.3 billion 1996 $13.6 billion 1991 $ 6.4 billion 1995 $12.9 billion 1990 $ 6.4 billion 1994 $11.1 billion 1989 $ 6.0 billion Source CardWeb's CardData (www.carddata.com)