Credit card profits for issuers of Visa Inc. and MasterCard Inc. cards dipped in 2007 as the financial companies had to increase their loan-loss provisions in response to rising chargeoffs, according to a report issued Monday by Cards&Payments, a SourceMedia Inc. publication.
The 2008 Bankcard Profitability Study and Annual Report found that industrywide, issuers generated after-tax profits of $18.08 billion, down 1.58% from 2006. The profits were 2.79% of average outstanding debt, compared with 2.97% in 2006.
Revenue from penalty fees increased 17%, to $7.54 billion, as many issuers increased their late fees and consumers submitted more payments after their due date.
Purchase volume in 2007 rose 3.1%, to $1.33 trillion.
