Magazine article American Banker

TSYS Shakes off Effects of Losing2 Big-Bank Pacts

Magazine article American Banker

TSYS Shakes off Effects of Losing2 Big-Bank Pacts

Article excerpt

First-quarter income grew at Total System Services Inc. despite the loss of an important customer last year, and the Columbus, Ga., processor predicted even higher growth this year despite the loss of another key processing contract.

TSYS Thursday reported net income of $57.3 million, up 13.7% from the year earlier. Revenue rose 4.2%, to $429.6 million.

"The results for the first quarter compared to last year are impressive, as the results for last year include revenues from two significant clients that deconverted after the first quarter of 2006," Philip W. Tomlinson, TSYS' chairman and chief executive, said in a press release.

Bank of America Corp., a longtime TSYS customer, began processing its consumer card portfolio in-house last year after buying the credit card giant MBNA Corp. Revenue from the B of A contract was included in TSYS' first-quarter results last year.

TSYS, which is majority-owned by Synovus Financial Corp., has projected net income growth this year of 20% to 22% despite the anticipated loss of processing revenue from JPMorgan Chase & Co., which plans to begin handling its own card portfolio in the third quarter. Though the New York banking company has said it would license TSYS software for this, such an arrangement is much less lucrative for TSYS.

The Georgia processor has tried to offset some of these losses by expanding abroad. In November it created a joint venture with Merchants Ltd., a U.K. unit of Dimension Data PLC of Johannesburg, to focus on Europe. TSYS, which owns 55% of the venture, said that its stake has improved its chances of winning customers in the region.

In September, TSYS raised, to 44.5%, its ownership stake in China UnionPay Data Co. Ltd., the credit card processing unit of China's only card network, China UnionPay Ltd. TSYS bought its initial 35% stake in December 2005.

Also in September, the U. …

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