Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Robert Napoli – Piper Jaffray & Co.
Robert Napoli – Piper Jaffray & Co.
My first question is on just digging in to the spending a little bit more on the US card business spending that you reported was down 10%. I was wondering if you could give more color around that if that’s a pure spending number or if you backed out balance transfers does that number change? And, what kind of trend are you seeing on spending in January so far? Has the trend worsened in to January.
Richard D. Fairbank
I don’t have the January numbers right in front of me but we certainly saw a notable decline in payment rates in the later part of the year and their down about 10% from a year ago. Basically what we see in our business is pretty consistent with what we see in the competitor data and consistent with essentially what seems to be reported by retailers. There’s also we do see a trend in balance transfers out. Our data is pure purchase volume not balance transfer, not cash advance so that’s a clear number.
Robert Napoli – Piper Jaffray & Co.
A follow up just on pricing in the credit card market, a number of your competitors I believe that they have been pretty clear that they have implemented price increases that I think we’ll see in the month of January. First of all, have you done similar and given that the consumer is already under pressure do you expect that to have additional upwards pressure on your credit losses?
Richard D. Fairbank
Bob, I think the net impact for card issuers like ourselves and our competitors, the net impact of repricing economically is going to be a strong positive. Any of these repricings will have second order effects in terms of increasing – can have some credit impacts but that’s certainly factored in, in our own calculations. Dynamic pricing management is certainly a part of how we manage the business and this year is no exception to that so we do have underway selected repricing in our portfolio.
But, the net affect I think will be unquestionably positive in terms of the P&L of our business. I think that from extensive experience on repricing, APR based repricing, we certainly I think are pretty well grounded on the relatively modest second order credit affects. There are also some attrition affects as well but we’ve got that all factored in.
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