Henry Duques, the chairman and chief executive officer of First Data Corp., spoke to analysts and reporters in New York last week about the company's exceptional annual growth.

The Hackensack, N.J.-based information and processing giant reported that yearly revenues grew 21%, to $4.93 billion.

Excluding charges and gains, net income for the fourth quarter was $206 million and 44 cents a share, up 37.5% from the period a year earlier.

First Data also announced last week it would divest Genex Services, a Wayne, Pa., a compensation claims processor. Provident Cos., based in Chattanooga, Tenn., a disability and life insurance coverage provider, is the buyer. Terms of the deal were not disclosed.

First Data said it was divesting Genex, which it acquired in its $6.7 million merger with First Financial Management Corp., to focus on its "core competencies," transaction and information processing.

Mr. Duques spoke with American Banker about these recent developments.

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The earnings and growth potential for First Data are enormous, since less than 30% of transactions are captured on cards. What do you see as the future growth potential for the company?

DUQUES: The next three to five years, we have the objective of growing revenue, profit, net income, and earnings per share by 20%. In the area of credit cards, I think we will be slightly above that number. The penetration of card use is far less than everyone really knows.

What was the most surprising thing that emerged from the CES/Nabanco merger?

DUQUES: The surprise was a positive one, and it was the receptivity of the banks to go into alliances with us.

Why do you suppose banks were so receptive to the idea of an alliance?

DUQUES: One, they wanted to get back into the business, and, two, it is a scale game. It is a very, very, very competitive market. If you don't have economies of scale, you have a problem.

If you don't build in functionality in the way you handle transactions that cost money, then you are going to fall behind, and to the bank partners, it was a tertiary business. It was something they did as a byproduct of issuing the card, so they didn't want to invest a lot of money in the system's functionality to do it. We do want to invest the money, and we will invest the money.

Is there room for another large acquisition in First Data's future?

DUQUES: You would look for us to do an acquisition that would get us somewhere between $100 million and $200 million in revenue, from a business that we are in, or from a new business that we think we can grow. By some standards that is a big acquisition. For a company our size, that would not be a big acquisition.

People speculate that First Data is poised to replace credit bureaus because of its access to transaction information at the point of sale. Can you comment on that?

DUQUES: Interesting. The credit bureaus have such depth of historical data. We would have to do two things: Match that depth of historical data and then add to it transactional data that we accumulate at the point of sale every day, which is why there is speculation that we might do that.

We are interested in that area, because we want to help our clients improve their credit granting, their credit monitoring, and their marketing. And that is why we set up First Data Solutions. It was set up to try to use that transactional data, plus other data that we have, plus the credit bureau data and turn that into more effective information for our issuers.

To the extent we can use the data in the credit bureaus, and create a product or service that helps our clients, that's what we will do. To the extent that we think it is a better approach to try and create historical data in some different way, we are constantly looking at that.

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