Card Specialists Post Uneven Results; MBNA Pulls Ahead of the Pack

By Quittner, Jeremy | American Banker, July 17, 1997 | Go to article overview

Card Specialists Post Uneven Results; MBNA Pulls Ahead of the Pack


Quittner, Jeremy, American Banker


Credit card specialists reported mixed results for the second quarter, with the continued profitability of MBNA Corp. setting a standard for the industry.

While MBNA's earnings rose 34% from the second quarter of 1996, troubled Advanta Corp. showed a small profit and Capital One Financial Corp. was up only 3%.

"There is a level of consistency at MBNA, a high level of performance that is unequaled in the industry," said Moshe A. Orenbuch, senior research analyst at Sanford C. Bernstein & Co.

"Advanta's business is eroding away," he added. "They must turn it around or sell it."

Mr. Orenbuch and other analysts attributed MBNA's growth to the success of its 4,500 affinity programs. Net income for Delaware-based MBNA rose to $138.4 million, and its delinquency rate declined by two basis points, to 4.21%, since the first quarter. That percentage is still higher than the 3.87% of last year's second quarter.

MBNA, the second-largest U.S. card issuer, said it has added 6.1 million customers, or 4.9 million accounts, this year.

"MBNA continues to focus on fundamentals," said Peter H. Frank, a spokesman for the Wilmington, Del., company. "We get the right customers, and we keep them, and our customers are using their cards more often."

Spring House, Pa.-based Advanta, which posted a $19.8 million loss for the first quarter, had net income of $5.4 million in the second; the year to-year decline was 88%. The income amounted to 12 cents a share.

Advanta's delinquencies dropped to 4.59%, from 5. …

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