Major U.S. banks’ credit card-issuing units brought in billions in interest income during the fourth quarter of 2009, led by JPMorgan Chase & Co.’s Chase Bank USA, which earned $8.43 billion in credit card interest income during the period. Credit card interest income accounted for 87% of the unit’s total interest income of $9.7 billion, which also includes commercial, industrial, installment and some student loans. Mortgage loans are handled by another business unit.
Credit card interest income varies each quarter, and the primary levers generating interest income are the total number of accounts in the issuer’s portfolio, the average interest rate per account and the percentage of outstanding balances that revolve, says Scott Strumello, an associate with Auriemma Consulting Group.
Discover Financial Services has no bank-branch network and limited loan products not tied to credit cards, so credit cards are the dominant source of its interest income, Strumello notes. Discover’s Discover Bank earned $3.25 billion in card interest income, or 91% of the unit’s $3.58 billion total interest earned.
Credit cards represented relatively less interest income for other major card issuers.
Bank of America Corp.’s FIA Card Services unit pulled in $6.58 billion in credit card interest income, accounting for 48% of the unit’s total interest income of $13.7 billion. HSBC Holdings PLC’s HSBA Bank USA unit earned $2.87 billion in credit card interest income, accounting for 42% of the unit’s total interest income of $6.87 billion. Citicorp Inc.’s Citibank unit earned $2.57 billion in credit card interest income, accounting for 44% of the unit’s total interest income of $5.87 billion. Capital One Financial Corp.’s Capital One Bank earned $2.3 billion in credit card interest income, accounting for 68% of the unit’s total interest income of $3.4 billion.
