HenryTo
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Joined: 06 Aug 2004
Posts: 11740
Location: Los Angeles, California
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 Posted: Thu Apr 21, 2005 9:03 am Post subject: MBNA (KRB) slumps as charge hits profit |
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Quote: "MBNA said in addition to the charge, its results were affected by "unexpectedly high payment volumes" from U.S. credit card customers."
While high payments are ultimately good for the economy, this is signaling that consumers are spending less and less in the short to intermediate term. Is there any doubt that consumer spending is now slowing down and so will the economy going forward?
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MBNA net falls on charge
Credit card firm issues 2005 profit warning
By Steve Gelsi, MarketWatch
Last Update: 10:12 AM ET April 21, 2005
NEW YORK (MarketWatch) - MBNA shares fell 16% Thursday after the company issued a profit warning and reported a 94% drop in first quarter net income as a previously disclosed charge and higher-than-expected payment volumes bit into its profit.
The credit card giant also warned 2005 earnings per share will be "significantly below" its 10% growth target.
Shares dropped $3.71 to $19.40, the lowest level for the stock since May, 2003.
MBNA Corp (KRB: news, chart, profile) earned $31.7 million or 2 cents a share, compared with $519.7 million or 40 cents a share for the first quarter of 2004.
The company took a previously disclosed charge of $768 million to reduce its work force by 1,000 and terminate a marketing agreement. See full story.
Without the restructuring charge, net income was $514.1 million or 40 cents a share. Analysts polled by Thomson First Call expected the company, on average to earn 46 cents a share excluding the charge.
MBNA said in addition to the charge, its results were affected by "unexpectedly high payment volumes" from U.S. credit card customers.
The higher payments reduced managed loans in the quarter more than in prior years, the company said.
Additionally, the payment volumes were particularly higher on accounts with higher interest rates, which adversely impacted the corporation's yield on managed loans, MBNA said.
Steve Gelsi is a reporter for MarketWatch in New York. |
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