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

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 5.16% in the first quarter, but were still well above the 2.87% of a year earlier.

"We've focused in the last few months on improving profitability, and we are clearly moving in the right direction," said D'Arcy Rudnay, an Advanta spokeswoman.

Advanta, the eighth-largest card issuer, said it expected to earn $1.50 a share this year, which some analysts said would be difficult to hit.

In recent months Advanta has moved to reprice two thirds of its portfolio, beef up collections, and tighten underwriting criteria. It has developed new marketing programs and said it plans to offer new cards products.

Capital One, of Falls Church, Va., saw its net income rise to $39.4 million. At 58 cents a share, the performance was 2 cents better than the First Call Corp. analysts consensus.

Michael Freudenstein, an analyst at J.P. Morgan & Co., said Capital One, the ninth-largest issuer, has made money from late and overlimit fees amid concerns of rising chargeoffs and delinquencies. At the same time, the company has tightened credit criteria and sought customers who "borrow less" and "act better," he said.

Though card losses have been rising in recent quarters, some experts see signs of growth and improving delinquency rates. But performance among card issuers varies.

"You can't generalize about the monolines any more," Mr. Orenbuch said. "They all stand on their own."

Mr. Freudenstein said, "We are seeing a greater disparity in issuers' ability to grow." +++

MBNA Corp. Wilmington, Del. Dollar amounts in millions (except per share) Second Quarter 2Q97 2Q96 Net income $138.4 $103.3 Per share 0.38 0.29 ROA 2.96% 3.03% ROE 33.02% 32.13% Net interest margin 7.40% 7.66% Net interest income 184.7 150.1 Noninterest income 694.8 444.1 Noninterest expense 565.4 374.0 Year to Date 1997 1996 Net income $262.4 $195.5 Per share 0.72 0.55 ROA 2.92% 2.91% ROE 31.46% 31.02% Balance Sheet 6/30/97 6/30/96 Assets $19,471.0 $13,954.4 Deposits 11,917.0 9,207.3 Loans 6,664.7 5,357.1 Total managed loans 43,183.3 30,564.7

(includes loan portfolio, loans held for securitization, and securitized loans) ===

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