Japan’s big three beat analyst forecasts

Mitsubishi UFJ (MUFG), Japan’s
largest banking group, has posted second-quarter net profits of ¥65
billion ($754.4 million), up 59.3 percent from ¥40.8 billion in the
year-ago-quarter. It added it was on target to report full year
earnings of ¥300 billion.

But alone among Japan’s three biggest banks,
MUFG was the only one to report an increase in credit costs
year-on-year for the quarter.

Within days of releasing its second-quarter
earnings, MUFG announced the biggest share issue by a Japanese
financial institution in anticipation of stricter global rules
relating to capital requirements; it said the capital raising
scheduled for mid-December would raise up to ¥1.06 trillion.

Mizuho and Sumitomo Mitsui both beat analyst
forecasts, with the latter reporting a 48 percent rise in second
quarter net profits to ¥123.5 billion, helped by a drop in bad
loans. It reiterated its full-year net profits target of ¥220

Mizuho returned to profit for the first time
in five quarters, posting net income of ¥92.3 billion compared with
a loss of ¥38.4 billion a year ago.

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The country’s fourth-largest bank, Resona,
posted a 0.9 percent drop in net profit to ¥85.6 billion.

Swedish banks pass stress tests, report upbeat Q3

According to Finansinspektionen,
Sweden’s financial services regulator, all four of the country’s
major banks – Swedbank, SEB, Nordea and Handelsbanken – sailed
through a thorough stress test. They are well placed to withstand
any worsening of the economic downturn and do not need to raise
fresh capital, it added.

In the third quarter, Swedbank posted its
third consecutive quarterly loss, SEK2.6 billion ($374.2 million)
following loan losses of SEK6.1 billion; non-performing loans
growth, however, slowed in all of the bank’s international markets,
with the exception of Ukraine and Lithuania.

Rival SEB beat analyst expectations with a net
profit of SEK385 million (compared with SEK2.5 billion in the
year-ago quarter). Looking ahead, SEB said the situation in the
Baltics was mixed, with Estonia showing signs of stabilisation
while the position had deteriorated in Latvia and Lithuania.

Handelsbanken and Nordea both reported
resilient quarterly earnings, with operating profit of SEK832
million and SEK3.3 billion respectively, beating analyst forecasts
on every key indicator. But for the remainder of the year, the two
banks disagreed on the extent of future losses: Nordea said
non-performing loans had peaked or would peak in the fourth
quarter, while Handelsbanken said it was too early to make such a

Elsewhere in the Nordic region, Finland’s
Pohjola Bank, part of OP-Pohjola Group, the country’s largest
financial services group, reported third-quarter pre-tax profits of
€87 million ($130.8 million), more than double the €43 million
earned in the corresponding period last year, boosted by higher net
interest income.

For the year to date, the bank posted pre-tax
profits of €211 million compared with €114 million for the first
nine months of fiscal 2008.

In Denmark, pre-tax profits at the country’s
biggest lender, Danske Bank, beat forecasts with a
smaller-than-forecast fall to DKK1.1 billion ($222.4 million) from
DKK1.58 billion.

NAB goes contactless

National Australia Bank (NAB) has
become the first bank in Australia to roll out Visa’s payWave
contactless technology, which allows customers to make purchases
under A$100 ($91.5) on their credit card without the need to sign
or use their PIN.

The service kicked off with NAB’s Low Rate
Visa card on 26 November and will be extended to other NAB products
during 2010. The contactless push follows the installation of
around 2,500 NAB contactless readers at merchants across Melbourne
and Sydney (see RBI 619).

Visa’s general manager for Australia and New
Zealand, Chris Clark, said customers would be able to make
contactless payments at a range of merchants, including fast food
outlets, convenience stores and sporting stadiums, including the
Melbourne Cricket Ground.

Connery to shake up Crédit Agricole image

France’s largest retail banking
group, Crédit Agricole, has turned to former James Bond star, Sean
Connery, to promote an ad campaign highlighting the bank’s green
credentials and to push the bank’s brand outside France.

An integrated ad campaign incorporating TV,
print and online created, by French advertising agency Aubert
Storch Associés Partenaires kicked off on 23 November and will run
until March.

Backed up by two new taglines – ‘Back to
common sense’ and ‘It’s time for green banking’ – the ads are
designed to promote the bank’s environmentally responsible strategy
and the need to pursue sustainable growth.

Sainsbury’s Bank pushes card loyalty

Out of the 224 credit cards
available in the UK, only 13 are still offering cashback on
spending, compared with 43 in 2005, according to a report from
market researchers Defaqto. The report was commissioned by
Sainsbury’s Bank, the financial services arm of the UK’s
third-largest retailer, Sainsbury’s.

Of the remaining cards offering cashback, the
average rate is 0.52 percent according to Sainsbury’s. By contrast,
the retailer offers the cashback equivalent of 2 percent on
Sainsbury’s purchases in the form of loyalty points via the Nectar
rewards scheme; non-Sainsbury purchases attract the cashback
equivalent of 1 percent.

In an effort to boost customer numbers,
Sainsbury’s recently increased the 0 percent introductory period on
purchases on its credit card from three months to 10 months but
continues to lag behind its principal rival Tesco’s financial
services unit.

While Sainsbury’s Bank started trading in
early 1997 as a joint venture with Bank of Scotland (now part of
Lloyds Banking Group) – six months before Tesco’s financial
services unit was launched – Sainsbury’s Bank’s customer numbers
currently total 1.5 million compared to Tesco’s 6 million (see Fiserv bags coveted Tesco UK

A supplement on loyalty in financial
services, based on a
Retail Banker International recent
round table held in London and featuring a number of leading banks
and retailers including Barclays, HSBC, Tesco and Visa and
sponsored by loyalty specialist PLP, will appear in the next

BCA leads the way for customer satisfaction

The banked population of Indonesia
fell in the third quarter by 1 percent to just 18 percent of all
adults, but customer satisfaction among those who do hold bank
accounts is improving, according to a report by market research
outfit Roy Morgan.

The survey of 25,000 Indonesians reported that
Bank Central Asia (BCA) retained top slot for customer
satisfaction, with 94 percent of its customers ‘fairly satisfied’
or ‘very satisfied’.

BCA’s three main rivals all showed improved figures for customer
satisfaction. BNI was up by 7 percentage points to 74 percent,
while Bank Mandiri improved its customer satisfaction score by 3
points to 74 percent. BRI was also up, by 1 point at 76

Chase and Facebook in charity programme

Chase, the third-largest retail bank in the US by deposits, has
upped its established relationship with leading social media site
Facebook by offering the site’s users the chance to donate money to
more than 500,000 small and local charities from a corporate
philanthropy fund.

Called ‘Chase Community Giving: You Decide
What Matters’, the bank is enlisting Facebook users, now totalling
more than 300 million, to vote for which small and local non
profits will receive donations totalling $5 million.

The eligible charity receiving the most votes
will be awarded $1 million. The top five runners-up will receive
$100,000 each and the 100 finalists, including the top winners,
will be awarded $25,000 each.

The move is an indication of a deepening
relationship between Chase and Facebook, a three-year partnership
that has seen the two work on student campaigns and card
promotions, among others, as well as continued interest from banks
in social media.

UK’s largest mutual reports 64% fall in half-year

Nationwide Building Society, the
UK’s largest mutual with total assets of £199 billion ($330
billion), has reported a depressed set of results for the half-year
to September in contrast to some of its commercial rivals such as
Barclays and HSBC. Underlying profit before tax fell 64 percent to
£117 million.

Nationwide said it remained the second-largest
savings provider and third-largest mortgage lender in the UK with
member savings balances of £122.7 billion and residential loan
assets of £128.8 billion.

The group managed to keep bad debts down: just
0.66 percent of residential loan accounts were more than three
months in arrears – just over a quarter of the industry average of
2.40 percent, according to Nationwide.

The group said it had attracted an 8.3 percent
share of the gross residential mortgage market for the period,
writing new business with an average loan to value of 63

But in a downbeat assessment of the UK retail
banking market, Nationwide’s chief executive, Graham Beale, said
the low interest rate environment, rising unemployment, stiff
competition from state-backed commercial rivals and reform of the
UK banking industry were all impacting Nationwide’s business.

“The reform of the banking sector is now
gathering pace and… will herald an unprecedented level of change,”
Beale added.

“While we… fully support the objective of
creating a more secure framework for banking regulation, we remain
concerned that some of the changes could undermine the future of
the building society sector which the government has said it wants
to protect.

“Looking ahead we expect the remainder of this
year and next to present a very difficult trading

Wells Fargo enhances rewards programme

Wells Fargo, the second-largest
retail bank in the US by deposits, has enhanced its rewards program
by adding what it calls the ‘Earn More Mall’ bonus point
opportunity. The change gives its customers the ability to purchase
retail gift cards, new travel features and benefits, five times as
many redemption options, and a redesigned site for better
navigation and improved search capabilities.

“In good economic times and bad, customers
expect to be rewarded for their business and their loyalty,” said
Bob Ryan, head of Wells Fargo Rewards & Enhancements

The Earn More Mall site is an online shopping
mall that gives rewards programme members the opportunity to earn
bonus points for purchases they make at participating online
merchants. The site provides members’ access to hundreds of
merchants in a wide variety of categories including apparel,
electronics, music and entertainment.

In a separate move, Wells Fargo has also
extended its Wells Fargo Cash Back card programme. Eligible
customers can now pay off home equity credit lines with cash
rewards as well as use cash rewards to pay money into current and
savings accounts, or pay down their personal lines and loans.
Customers can also pay down their Wells Fargo Home Mortgage with
the Wells Fargo Home Rebate Card.

NatWest Mobile Banking available on app store

A month after discussing its plans
to reinvest comprehensively in its UK online distribution channel
(see RBI 620), Royal Bank of Scotland has announced that
its main UK retail banking subsidiary, NatWest, has rolled out a
free banking application on Apple’s iPhone platform.

The app allows customers to check their
account balances, recent transactions and manage their money using

RBS cites research which shows that increasing
interest in the mobile channel in the UK – with a quarter of
respondent being interested in money transfers between bank
accounts, a further quarter being interested in receiving fraud
alerts and 24 percent saying they would like to pay in cheques
without visiting a branch.

NatWest has also launched a free service
called Quick Statement Text on Demand. While customers can already
receive weekly balance and ‘threshold’ text alerts, they can now
request free updates through the Quick Statement Text on Demand

In October, RBS, 84 percent owned by the UK
state, said it would spend £800 million ($1.33 million) on
technology over the next few years to improve its sales and service

Allied Irish Banks updates on performance

Ireland’s largest banking group,
Allied Irish Banks (AIB), has said the deterioration in its overall
loan book is continuing but the pace of that deterioration is

The bank, which has received significant state
support in the wake of the Irish economic collapse, is set to
benefit further from the country’s National Asset Management
Agency, a €54 billion ($81 billion) government fund to buy bad
assets from the country’s crippled banking sector.

In a statement, AIB said: “Our financial
results for 2009 are expected to reflect solid operating profits
before bad debt provisions set against a background of a very
difficult operating environment.

“We expect operating profit to be achieved in
all divisions – Republic of Ireland, Capital Markets, UK and CEE.
The bad debt charge will be heavily weighted to the loans that have
been identified for potential transfer to the National Asset
Management Agency (NAMA) over the coming months. These loans are
predominantly in the Republic of Ireland.”

The Irish government has already injected €11
billion into the likes of AIB and Bank of Ireland, and nationalised
Anglo Irish Bank.

For AIB’s Republic of Ireland total loan book
of €78 billion, around €57 billion is non-NAMA funds, of which
around €27 billion is in personal mortgages.

AIB added: “We now expect the bad debt charge
for 2009 to be around €5.3 billion, with the increase predominantly
related to the €24 billion portfolio indicated in September by the
Minister for Finance that may transfer to NAMA.”

Canada’s BMO earnings beat forecasts as it snaps up Diners

BMO Bank of Montreal (BMO), the
first of Canada’s major banks to report fourth quarter and
full-year results, beat analyst expectations with a 16 percent rise
in earnings. It also reported that it had snapped up the well-known
North American credit card business of Diners Club from Citigroup,
doubling its corporate card portfolio.

Canada’s fourth-largest bank posted net income
of C$647 million ($615 million) for the fourth quarter, up C$87
million from the year-ago-period; full year earnings of C$1.78
billion were down 10 percent from $1.98 billion in fiscal 2008.

BMO’s domestic personal and commercial unit
performed strongly, with net income for the year up by almost 15
percent at C$1.39 billion, led by volume growth across most product
lines, improved net interest margin and strong growth in personal
and commercial deposits. Looking ahead, BMO said continued low
interest rates should boost consumer demand for personal loans and

The deal to acquire Diners Club is expected to
add nearly $1 billion of receivables and $7.8 billion of card
transactions in 2010; BMO is targeting to close the deal by the end
of the first quarter.

US card delinquency rates start to fall

US credit cardholders at least 90
days late in making repayments fell to 1.1 percent in the third
quarter, down from 1.17 percent in the prior three month period,
according to a report from the country’s third-largest credit
agency TransUnion.

Year-on-year, credit card delinquencies
remained flat from 1.09 percent in the third quarter of 2008 but
average credit card borrower debt (defined as the aggregate balance
on all bank-issued credit cards for an individual borrower) fell
1.71 percent to $5,612 compared to $5,710 in the third quarter of

“For the first time in 10 years, third-quarter
national delinquency rates showed a decrease from the previous
quarter, indicating
a departure from the usual seasonal patterns,” said Ezra Becker,
TransUnion’s director of consulting and strategy.

Becker added that cutbacks in credit
availability and higher interest rates also helped to cut the
delinquency rate.

But ratings agency Moody’s painted a gloomier
picture: while its October credit card index showed a drop to 10.04
percent in the charge-off rate from an a record figure of 11.49 in
August, the ratings agency predicted that card balances written off
as uncollectable by credit card firms will rise again to peak at
between 11 percent and 13 percent in the first half of next

Amex set for $300m Revolution

American Express (Amex) is acquiring
online payments start-up Revolution Money in a $300 million deal
expected to close in early 2010.

Founded only two years ago, Revolution
provides payments via an internet-based platform and also issues
prepaid cards that can be used for offline payments or to withdraw
cash from ATMs. Revolution also offers a remittance service, Money
Exchange, focused on social and instant messaging networks.

While Revolution is currently focused on the
US only, Amex has plans to roll out the service internationally in
due course.

ATM fees, not overdrafts, anger customers – ING

US consumers are more annoyed by
rising ATM fees, not overdraft charges, according to a consumer
report released by ING Direct.

ING, which has been forced to sell
ING Direct USA as part of its recent deal with the European
Commission (see RBI 621), said
26 percent of the survey sample said ATM fees angered them most,
while 24 percent gave overdraft fees as their biggest

The survey, conducted online by market
researchers Harris Interactive, found that 20 percent of those
surveyed paid a fee of, on average, $2 at least once a month when
they withdrew money.

The report added that 67 percent of
respondents who have been charged an ATM fee blame banks for
“nickel and diming” them with only 33 percent blaming themselves
for “poor planning” in not taking steps to limit their liability to
ATM fees.

According to a report published in September
by US price comparison website, the average ATM fee
for non-bank customers in 2009 rose 12.6 percent to $2.22.

Bank Austria offers Champions League themed prepaid

UniCredit’s Austrian subsidiary,
Bank-Austria Creditstalt, has introduced a football-themed prepaid
card promoting the UniCredit Group’s sponsorship of European
football’s richest club competition, the UEFA Champions League.

To flag-up the November launch, the bank
kicked off a promotion offering cardholders the chance to attend
the Champions League final, scheduled for Madrid in May 2010. Each
purchase made with the card until 1 January represents an entry to
a prize draw, with the three first prizes each worth up to €12,750

HSBC partners Visa to roll out combined debit-credit

HSBC has teamed up with Visa for a
six-month trial in the UK of a combined debit and credit card which
enables cardholders to choose their method of payment using a
single PIN at the point of sale. Card supplier Oberthur has
developed the cards which will operate on Visa’s SimplyOne
platform. The cardholder’s name, start and expiry dates are the
same for both methods of payment so both the debit and credit
facilities are useable online and by telephone.

According to Mariano Dima, head of marketing
at Visa Europe, the six-month-trial involving 100 Visa and HSBC
staff is “the first step towards the commercial issuance of
multi-application cards in the UK”.

The first such card in the neighbouring French
market, Crédit Agricole’s Double Action card, has proved to be one
of the biggest retail banking product successes in Europe of the
past year. Within 14 months of its June 2008 launch, almost 850,000
cards were issued by the bank, generating annual card fee income of
up to €100 million ($150 million) (see RBI 619).

Strong results from Maybank, CIMB, DBS

Malaysia’s two biggest lenders,
Maybank and CIMB, have reported strong quarterly results for the
three months to 30 September: up 54.1 percent and 62 percent to
MYR882 million and MYR26.8 million, respectively (a record
quarterly profit for CIMB).

Maybank’s net interest margin for the quarter
improved by 30 basis points to 2.82 percent, boosted by a reduction
in the cost of customer deposits, while retail banking revenue for
the quarter increased to MYR1.06 billion from MYR1.0 billion in the
previous corresponding period.

At CIMB, lower recoveries at its group special
assets management arm that manages its bad loans resulted in the
group’s domestic consumer unit contributing 15 percent of group
profit before tax in the first nine months compared with 23 percent
a year ago.

Solid earnings were also posted by Singapore’s biggest bank DBS.
Its Q3 net profit rose 49 percent from the year-ago period to S$563
million ($406.3 million), ahead of analyst forecasts, boosted by
increased fee income and a 6 percent rise in net interest