Magazine article American Banker

MBNA Gains from Dip in Card Delinquencies Favorable Bond Market

Magazine article American Banker

MBNA Gains from Dip in Card Delinquencies Favorable Bond Market

Article excerpt

MBNA Corp. stock was lifted Friday by news of lower credit-card delinquencies and a favorable bond market.

The Newark, Del.-based company reported April delinquencies of 3.42%, the lowest level since last year's second quarter. The industry average for bank delinquencies in March was 5.01% and has been climbing, said Robert McKinley, president of RAM Research, Frederick, Md.

"MBNA has always been one of those banks that managed delinquencies well," he added.

The Stanard & Poor's bank index rose 1.17%; while MBNA shares rose 2.54%, closing at $30.25, up 75 cents.

Analyst Moshe A. Orenbuch, with Sanford, Bernstein & Co., said MBNA's stock price was also buoyed by a healthy bond market. The government reported a widening trade deficit, which helped boost bond prices by quelling inflationary fears.

Mr. Orenbuch said that MBNA has been characterized by "extraordinary marketing and growth." He noted that the company has a third less credit losses than other banks and has a new platinum card, which could garner as many as a million new customers.

Analyst Merrill H. Ross of Wheat First Butcher & Singer observed, however, that the delinquency level should be kept in perspective. A 3.42% delinquency level is higher that MBNA has experienced in the past, she said, adding that delinquency ratios can be distorted by account growth.

New accounts "do not start out bad," explained Ms. Ross., but could go bad at a later date.

Separately, BankAmerica Corp. …

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