1/2 billion dollars in just 4 months: Just how profitable is credit card income to banks? Let them tell you in their own words…



Bank Reports 23% increase to its income as a result of bankcard interchange revenues

As the banks report their quarterly results, you can follow the profitability from their bankcard interchange income to identify how profitable this segment is. For instance, on Friday, July 22nd, First Financial Bancorp of Hamilton, Ohio reported that its “Bankcard interchange income increased $297,000 or 23.37 percent from the same quarter in 2004.”

Another example is from the May 5th, JP Morgan Chase & Co quarterly results, where they reported: “Card Services revenue benefited from higher loan balances, which resulted in higher net interest income. Additionally, higher customer charge volume generated increased interchange income. Partially offsetting these revenue improvements were volume-driven increases in payments to partners and higher reward payments. The provision for credit losses benefited from lower net charge-offs reflecting lower bankruptcies and delinquencies, partially offset by additions to the allowance for loan losses related to growth in on-balance sheet loans. Expenses benefited from lower compensation and processing costs, which were partially offset by increased marketing spend (sic).”

Then, a day later, on May 6th, Bank of America reported a staggering, nearly one-half billion dollar result … in just four months! The bank’s quarterly filing reported: “Card Income increased $494 million due to increased fees and interchange income, including the $242 million impact from the addition of the FleetBoston card portfolio.”

(Source: WayTooHigh.com)

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