Consumer Payment Card News

Sinking Profits

While some credit card issuers have racked up record profits this year due to the cuts in interest rates, a few issuers are experiencing their worst year ever. American Express and CompuCredit are the latest victims, following others such as Providian and NextCard. The American Express charge/credit card division this week reported fourth quarter net income of $170 million, a 64% decline from the fourth quarter of 2000. Weak business charge volume and higher provisions for losses were the major factors for the decline. Fourth quarter charge volume was down 5.5% and charge-offs have soared 34% over the past twelve months. Meanwhile CompuCredit, issuers of the sub-prime ‘Aspire VISA’ card, indicated this week it could post a slight loss for the fourth quarter, due to a loss on the sale of two securitizations. CompuCredit’s net charge-off rate was 15.3% in the fourth quarter, as compared to 13.3% one year ago. At the end of 2001, the 60+ day managed delinquency rate was 11.1% as compared to 9.5% for 4Q/00. CompuCredit has been ramping expenses down including the layoff of approximately 70 people. For complete details on the performance of U.S. credit card issuers for the fourth quarter visit CardData (

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