Credit

Releases of allowances for bad credit card loans continued to plump banks' bottom lines in recent earnings reports, but loss rates look set to bounce off record lows in the first quarter.

Credit cardholders in the United Arab Emirates may be in for some summer cheer as the country’s central bank may cap annual interest rates and fees.

The trend of higher cardholder spending continued for American Express Co., allowing the New York-based card company’s U.S. Card Services unit to report a 3.9% rise in fourth quarter net income, to $727 million from $700 million a year earlier, the card brand reported Jan. 19.

Growth in loans, strong purchase volumes and stable margins helped Capital One Financial Corp.’s Credit Card unit to generate 2% fourth quarter revenue growth, to $2.59 billion from $2.54 billion during the same period in 2010. The unit’s profit, however, dropped 39.8%, to $353 million from $586 million.

New debit card interchange rules unfolded during the last quarter of a year already plagued by a sluggish economy, making it difficult for Bank of America Corp.’s Card Services unit to deliver positive fourth-quarter earnings.

BancorpSouth Inc. in Tupelo, Miss., has selected Total System Services Inc. to process its debit card and consumer and commercial credit cards.

Reductions in income caused by a debit card interchange rate reduction and reduced credit card interest income spurred Bank of America Corp.’s Card Services unit on Jan. 19 to report a 24.3% drop in fourth quarter net revenue, to $4.06 billion from $5.36 billion during the same period last year. Net income also dropped, by 20.9%, to $1.02 billion from $1.29 billion.

Indonesia’s central bank has approved new regulations that will restrict credit card issuance to combat the country’s mounting card debt.

Crafting new credit card fees that consumers will swallow is likely to be the key to survival for the credit card industry.

Target Corp., which has tried for years to sell its credit card assets, is giving up for now, and it is spending more than $2.8 billion to divorce itself from JPMorgan Chase & Co.

U.S. Bancorp’s payments unit produced a strong fourth-quarter profit thanks to the temporary release of loan-loss reserves, but the decline in debit card interchange caused by new regulations is forcing a strategy shift.

Credit cards remain the preferred payment method for online purchases in the United Kingdom because of their payment protections and potential for users to earn reward points. But other payment methods continue to attract consumer interest as well.

As credit quality improves and purchase volumes slowly improve in most regions, Citigroup Inc.’s credit card operations gradually are regaining steam, although borrowing remains soft.

If financial-services companies have any reservations about being appointed the front-line enforcers for copyright protections under proposed anti-piracy legislation, now would be their time to strike.

The economy may not be booming, but new data show that personal bankruptcies in 2011 declined for the first time in four years, providing another positive sign for consumer credit card performance.

JPMorgan Chase & Co. set a strong pace for its credit card sales-volume growth during the fourth quarter that rivals may find difficult to match, but other factors caused the issuer’s net revenues and net income to decline.

A Jan. 10 Supreme Court ruling upheld the controversial practice of including mandatory-arbitration clauses in credit card contracts.

Narrower loan spreads and lower average loan balances, partially reversed by lower revenue reversals associated with a reduction in net charge-offs, helped drive fourth-quarter reductions in both net revenue and net income for the Card Services & Auto unit of JPMorgan Chase & Co., the issuer announced Jan. 13.

All of China’s bank-led payment platforms and third-party payment providers would have to ensure their customers use their real names when paying online under regulations the People’s Bank of China proposed Jan. 5.

The Indian government plans to expand the scope of its widely used Kisan credit card to enable farmers to use it also as a debit card linked to a separate account that earns interest, an official at the Ministry of Agriculture privy to the discussions tells PaymentsSource.