Credit Cards Profit Pools in Western Europe 2008

Introduction

Lafferty Credit Cards Profit Pools in Western Europe 2008 focuses on profitability in issuing and acquiring markets and draws upon the key metrics in Lafferty Groups research to calculate market profitability and profitability per card. These numbers are then validated by industry experts in the individual countries. The analysis focuses on four revenue streams - net interest revenue, merchant revenue, annual card fees and other non-interest revenue. An analysis of costs and credit loss rates enables Lafferty Group to provide accurate predictions of profitability going forward. It contains 16 country studies: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. A mixture of quantitative and qualitative methods is used by a dedicated team of in-house researchers and analysts to produce accurate and unbiased data. The report is reader-friendly through the use of a bullet point format and graphs, pie charts and tables to help illustrate key data.

Highlights There appear to be significant differences in terms of credit card profitability within Western Europe with profit per card figures of between $17 and $89. Though the figure has declined over the past few years, average profit per card in Western Europe was calculated at just above $20 for 2007.

Of course, there are a large number of factors that will impact on card profitability in any country. To take the UK as an example, profits have fallen as net credit loss rates have increased, and there have been limited growth opportunities as consumers have been moving from credit cards to cheaper lending products and have reduced card spending.

Another factor that could impact on profitability is regulation of interchange fees.

Going forward, profitability will be affected by how successful the banks are in lowering loss rates and increasing interest rates by more than any increase in the cost of funds.