Magazine article American Banker

Bank of N.Y. Shrugs off Cut-Price Card Rivals

Magazine article American Banker

Bank of N.Y. Shrugs off Cut-Price Card Rivals

Article excerpt

NEW YORK -- Bank of New York Co.'s rapid credit card growth will not be deterred by the aggressive marketing campaigns of other issuers, chief executive J. Carter Bacot said.

"They are still nowhere near us," he said, referring to the on-slaught of low-rate, no-annual-fee competitors.

Bank of New York's interest rates are four to five percentage points below most of the competition, chief financial officer Deno Papageorge said.

Profits Said to Be Growing

Bank of New York's cards outstanding rose by 22% in the first quarter to 4.8 million from a year ago. Mr. Bacot said that card profits are growing at an above-20% annual rate, which he sees as "sustainable over the next couple of years.

"We know we are going to have a good 1994 in credit cards, which should roll on in 1995," Mr. Papageorge said.

He said that if the economy grows, so will the number of cardholders. He said this growth should eventually stabilize at 8% to 10%. But he said that once the costs of acquiring new cards are absorbed, card earnings should be even stronger.

Going After New Business

Bank of New York has been aggressively courting new card business in the last several years and was one of the first to offer a low-rate, no-fee card. It is the seventh largest U.S. bank credit-card issuer.

Mr. Bacot also said that his bank's credit quality standards are not being sacrificed to win credit-card growth.

Drop in Delinquencies

Credit-card delinquencies usually hit a peak about 12 to 15 months after an account is added. …

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