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Citing rising debit card purchase volume, Wells Fargo & Co. today announced it earned $946 million in card fees during the third quarter ended Sept. 30, up 57.4% from $601 million during the same period last year. Wells reported a net charge-off rate of 10.97% on credit card receivables, up 377 basis points from 7.2% during last year's third quarter. The company noted that it has recently tightened credit card underwriting criteria and curtailed balance increases and balance-transfer offers. In prerecorded comments published today, Howard Atkins, Wells senior vice president and chief financial officer, said despite the uptick in charge-offs, the company is seeing "signs of stability" in its credit card portfolio. He said he expects losses to peak during the first half of next year and then gradually decline. Credit card use was down during the quarter because or reduced consumer spending, but debit card purchase volume continues to grow as consumers use debit cards more for everyday purchases such as grocery and gas, he said. The "relationship focus" of Wells' credit card portfolio provides an advantage over competitors that use a different marketing philosophy, Atkins said. "Our credit cards are sold primarily to our retail-banking customers, and we have not focused on being a large national credit card company," he said. Moreover, Wells' $23.6 billion credit card portfolio represents only 3% of the bank's total loans, Atkins noted.
