Card Issuer Profile: Bank of America

Table of Contents

• Overview
  • Catalyst
  • Summary
• Table of Contents
• Table of figures
• Table of tables
• Bank of America
  • Key findings
  • Company overview
    • Background
    • Ownership and management
      • Bank of America board of directors
      • Employees
      • Management values
    • Company structure
      • Bank of America' s cards business is part of the Global Consumer and small Business Banking Group
    • Geographic coverage
      • Bank of America' s international cards focus is on Canada, the UK and Continental Europe
  • Strategic focus
    • Bank of America' s cards business sits in its Global Consumer and Small Business Banking division
      • Cards services accounts for a significant proportion of Bank of America' s revenues
    • Bank of America is the largest issuer in the US with a strategy revolving around organic growth.
      • A strong distribution network is key to Bank of America' s issuing and client servicing strategies
      • Bank of America uses affinity marketing to grow its card business
      • Bank of America has been aggressively growing its loan book
      • Bank of America also focuses on maintaining a high quality clientele in order to contain risks
    • In foreign markets, Bank of America continues to operate under the MBNA brand
      • Outside of the US, Bank of America acts as a monoline player in the issuing market
      • As in the US, there is a strong emphasis on affinity marketing
      • MBNA also follows the policy of aggressively building outstandings
    • Card statistics
      • Number of cards in issue
      • Balances outstanding
    • Key financials
      • Profit and loss account
      • Balance sheet
  • Card product offering
    • In the US, Bank of America has a wide range of card products to suit all consumers.
      • Affinity cards are an ' off the shelf' solution for linking organizations to card products
      • The second main product type offered is reward cards
    • Outside the US, Bank of America also focuses on the affinity and co-branded markets
      • In the UK, MBNA offers a range of co-brands and affinity products, as well some own-brand cards
      • In Canada, MBNA has a similar product line to Bank of America in the US
      • MBNA has a far more limited selection of products in Ireland
  • Company outlook
    • Bank of America' s position in the US market is secure
      • Within the US, Bank of America has a wide product range, leaving it well-placed for organic growth
      • Bank of America also benefits from a strong distribution network in the US
      • Bank of America is in a reasonably strong position to get through the current liquidity crisis
    • However, saturation in the US market makes continued international expansion a priority
      • Bank of America is examining the possibility of expanding its international cards offering to other markets
      • Outside of the US, the cards business may not be as robust in a downturn
  • Datamonitor Competitor Benchmark
• APPENDIX
  • Definitions
    • Affinity card
    • Charge card
    • Co-branded card
    • Commercial card
    • Credit card
    • Premium cards
    • Private label card
  • Data relating to the graphics in this profile
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Bank of America board of directors, 2006
    • Table 2: Bank of America Card Statistics, year end 2006
    • Table 3: Revenue, costs and profit for Bank of America, 2002-2006
    • Table 4: Bank of America cashback cards, 2008
    • Table 5: A selection of co-branded airline cards, 2008
    • Table 6: A selection of cruise line co-branded products
    • Table 7: A selection of MBNA cards in the UK, 2008
    • Table 8: Details of MBNA products in Canada, 2008
    • Table 9: A selection of MBNA products in Ireland
    • Table 10: Scorecard logic, part one
    • Table 11: Scorecard logic, part two
    • Table 12: Sources of Bank of America revenue, 2006
    • Table 13: Bank of America credit card charge off ratio, US, 2006-2007
    • Table 14: Bank of America credit card delinquency ratio, US, 2006-2007
    • Table 15: Bank of America, number of cards by country, 2002-2006
    • Table 16: Bank of America, revenue and costs, 2002-2006
    • Table 17: Bank of America revenue sources, 2002-2006
    • Table 18: Bank of America Balance sheet, 2002-2006
    • Table 19: Current relevant Datamonitor publications, 2007-08
    • Table 20: Future relevant Datamonitor publications, 2008
  • List of Figures
    • Figure 1: Card Services produced 25% of Bank of America earnings in 2007
    • Figure 2: Bank of America is active in the North American, European and east Asian markets
    • Figure 3: Card services sits in the Global Consumer and Small Business Banking division of Bank of America
    • Figure 4: Within cards services, consumer cards in the US generates more than two thirds of the revenue, H1 2007
    • Figure 5: Bank of America is the largest issuer in the US in terms of receivables, 2007
    • Figure 6: Bank of America has more than 6,000 bank branches across the US, 2007
    • Figure 7: Bank of America uses multiple channels to reach potential customers
    • Figure 8: Affinity marketing plays a large part in Bank of America' s cards strategy
    • Figure 9: Bank of America has been increasing its card-based lending, 2006-2007
    • Figure 10: The delinquency rates at Bank of America have risen modestly through 2007
    • Figure 11: Bank of America enjoys a low, but climbing, charge off ratio
    • Figure 12: Balance transfer offers: good for the cardholder, not so good for the issuer
    • Figure 13: The acquisition of MBNA considerably boosted Bank of America' s card issuance, 2002-2006
    • Figure 14: Bank of America' s revenue has more than doubled from 2002-2006
    • Figure 15: Global Consumer and Small Business Banking contributed 56% of Bank of America' s revenue in 2006
    • Figure 16: Growing revenue and controlled costs have resulted in Bank of America' s profits doubling from 2002-2006
    • Figure 17: Bank of America has a strong balance sheet, 2002-2007
    • Figure 18: All Bank of America Alumni cards have the same basic features
    • Figure 19: Bank of America has a number of charity affinity cards
    • Figure 20: Bank of America provides incentives to encourage consumers to sign up for products
    • Figure 21: MBNA' s BT credit card allows consumers to reduce their phone bills
    • Figure 22: MBNA is tapping the green market in Canada, 2008
    • Figure 23: Holders of the Ryanair card receive a bonus flight after their first purchase
    • Figure 24: The Fly and Buy! Card allows cardholders to redeem points to a range of destinations, 2008
    • Figure 25: Datamonitor competitor benchmark - Bank of America