Credit card industry sees profits rise
While many financial institutions cried foul over greater regulations on the way they could charge rates and fees on credit card debt, 2010 saw the industry turn a massive profit.
Card issuers saw net pre-tax profits increase to $18.5 billion in 2010, up from $13.6 billion the year before, despite declines across the board in revenues, according to a report from the industry analyst firm R.K. Hammer. This came largely because expenses took a significant tumble.
Overall, revenues from both interest and fee income slipped to $163.3 billion last year, down from $166.5 billion the year before, the report said. Meanwhile, expenses, including charge offs, fell to $144.8 billion from the $152.9 billion observed in 2009.
In addition, new ways to drive revenues will likely increase this year.
“We do look for some improvements later in 2011, which should also well serve the broader market and financial institutions in particular,” said Robert Hammer, founder of the firm.
However, those companies that both issue credit cards and process debit transactions say a new proposed rule from the Federal Reserve Board to limit debit swipe fees would restrict profits even more severely.