Fed: Credit Card Issuer Profits Rise
The Federal Reserve has released its annual report to Congress on the profitability of credit card operations by banks showing pre-tax net earnings of 3.66% of outstanding balances in 2003, up from 3.28% in 2002 and 3.24% in 2001.
Reflecting favorable trends in market interest rates, interest expenses fell 22 percent from 2002. Noninterest expenses also fell, but only by a more modest 3 percent. On the revenue side of the income statement, interest income as a percent of assets declined from the 2002 level by 9 percent. Further offsetting some of the beneficial effects of lower funding costs, income derived from noninterest sources such as fees, merchant discounts, and credit card securitizations fell about 1 percent.
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