MBNA Corp. is closing in on the No. 1 position in the credit card market long held by Citicorp. It has risen to that lofty height by staying a strategic course it set years ago: identify the best customers, primarily using affinity-group marketing techniques, and deliver a high-quality service that promotes satisfaction and long-term loyalty.

MBNA's stellar profitability record throughout its 15 years - even in recent quarters as unprecedented waves of delinquencies and bankruptcies engulfed many competitors - speaks for itself.

The corporation's second-quarter net income jumped 34%, to $138.4 million. Its return on assets of 2.96% and return on equity of 33.02% were 56% and 40% better, respectively, than the next best among U.S. bank holding companies with more than $10 billion of assets.

"Overall I think the characteristics of our customers have remained consistent, if not really improved, over the years," said John R. Cochran, vice chairman and chief marketing officer of MBNA America Bank, the card- issuing subsidiary in Wilmington, Del.

Its typical customer has been employed for 13 years, owns a home, has a 15-year history of paying bills promptly, and has an average income of $60,000.

Thanks to its association alliances, the company says its cards are carried by 56% of all doctors, 24% of nurses, and 35% of lawyers. These are relatively well-heeled populations that bring MBNA the industry's highest average revolving balance per account, $3,300.

In terms of outstandings and charge volume, no other major card issuer is growing as fast. In the first half of 1997, MBNA increased managed loans by $4.6 billion, bringing its portfolio to $43.2 billion.

It was within about $6 billion of Citicorp's United States total, having cut the yearend 1996 gap in half.

MBNA has fueled its growth with endorsements from more than 4,500 organizations, ranging from schools and alumni groups to professional sports leagues. In the first six months of 1997, MBNA added 310 groups.

The second-quarter chargeoff rate of 4.21% was higher than a year earlier but below the industry average.

Bruce L. Hammonds, 48, vice chairman and chief operating officer, said the human element in deciding whether to approve or reject applications plays a large part in the company's credit quality.

"We don't just use credit scoring," he said. "We have individuals making the credit decisions."

While other issuers have been burned recently by blanket mailings to mass audiences, MBNA blends computerized credit scoring with old-fashioned brain power to determine who gets approved for cards and loans. On borderline cases, comprising 25% of applicants, MBNA credit analysts make calls to get additional information.

Outside observers are quick to point out that the in-depth selection process is expensive, but they agree with the company that it is a big reason for the low loss rates.

MBNA's belief in the personal touch is manifest in other ways. It relies mainly on recent college graduates to do its in-house collections work.

While the company has minimized delinquencies, its platinum card debut in April 1996 was helping it lure customers away from the competition.

"It was the platinum that really provided the spurt this year," said Robert B. McKinley, president of RAM Research Group, Frederick, Md.

The program has added $8 billion to receivables, from 6.1 million cardholders. The success was fueled by some $33 million in after-tax marketing expenditures in 1996 alone.

The company has also found growth and profits across the Atlantic, having booked $1.8 billion over two years in the United Kingdom. Mr. Hammonds, said MBNA has 6% of the market, which leaves plenty of room for more.

In addition to opening a sales office in Dublin, Ireland, Mr. Hammonds said the company has looked at every country in western Europe, where debit cards tend to be far more prevalent than credit. It has not yet announced its plans to enter those potential credit card markets.

James Shanahan, who worked as a manager at MBNA from 1988 to 1990 and who is a partner in Business Dynamics Consulting, Nyack, N.Y., cited three ingredients of MBNA's success: high standards, a skeptical view of industry conventions, and Charles Cawley, the chairman and chief executive officer.

"The things that keep them driving and achieving come out of his vision," Mr. Shanahan said.

The vision started in 1982, when MBNA was founded by Mr. Cawley, Mr. Hammonds, Mr. Cochrane, and other members of its senior management. In the early years, working with Transnational Financial Services Inc., a travel service company for affinity groups, MBNA started building its managed loans with access to a smorgasbord of associations. In 1993 it terminated the Transnational agreement.

MBNA, originally a subsidiary of the defunct MNC Financial Inc. of Baltimore, was spun off in 1991 as a publicly traded company.

Over its 15-year history, the management has remained intact and employee retention is highly valued.

"We have a very low turnover, consistently below 10%, year after year," Mr. Cochran said.

That engenders loyalty and a "tight ship," said Mr. McKinley. "They don't leak" plans and secrets the way other companies with "revolving doors" do, he said.

MBNA also does more than the average amount of development and other work in-house, which allows it to control its information and pursue leads quickly.

Mr. Cochrane, 45, started with MNC Financial in 1973, when it had $16 million of credit card loans. Once MBNA gets a sales lead from an organization, he said, it can put together a full presentation, with the help of its in-house advertising agency, and be in the potential client's office in 24 hours.

"The standard for excellence and achievement is extremely high," Mr. Shanahan said. "It's just expected that you are going to exceed your budget. To say that the bar is set high is an understatement. That creates an environment of stretching and pushing out farther."

"When you look at the growth of MBNA," Mr. McKinley said, "it is very realistic they could unseat Citicorp by the end of the year."

"We don't really have a goal of overtaking Citibank," said Mr. Hammonds. "We do feel confident that we will continue to grow very significantly and that will depend on what Citibank does in the future. We see them as a very good competitor."

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