Bank of America Corp. plans to curtail new credit cards and tighten standards for card and small-business customers, Brian Moynihan, the head of its consumer division, said last week.
Bank of America expects to issue 2.5 million credit cards this year, down from the peak of 10 million several years ago, Moynihan said Thursday at a presentation for analysts in Boston. Card balances will likely stabilize around $175 billion from a peak of $250 billion, he said.
The 2006 acquisition of MBNA Corp. made Bank of America one of the largest U.S. card issuers. After record industry defaults this year and more federal regulation, the Charlotte company plans to be more service-oriented and less sales-driven, Moynihan said.
"We have a good service culture; we have to have a better one," Moynihan said. "This is a little bit of a DNA change."
Kenneth Lewis, B of A's chief executive, shifted Moynihan to head of retail banking in August in place of Liam McGee, who had the post since 2001. Higher defaults on credit card loans contributed to a $1 billion loss in the third quarter.
"We gave out a lot of cards, but we were giving them to too many people," Moynihan said. "Now we are being more selective."
Loans at least 30 days overdue climbed to 7.53% in September from 7.47% in August, B of A said last month.
Writeoffs improved to 14.25% in September from 14.54% in the previous month. B of A's delinquencies and defaults are the highest among the six biggest U.S. card lenders.
Credit card issuers had to deal with record defaults this year as the recession drove the U.S. unemployment rate close to more than 10%. Defaults typically track the jobless figures.
Consumer complaints about hidden fees and sudden increases in interest rates also prompted new federal curbs on the industry.
Lewis told analysts last month that after five straight quarterly losses totaling $4.7 billion, Bank of America was planning to overhaul its credit card unit.