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News Scan May 2015

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • GDP Contracts: U.S. gross domestic product contracted at a 0.7% seasonally adjusted annual rate in the opening months of the year, a significant downward revision from an initial estimate of 0.2% growth. This marks the third time since the recession ended that the official measure of GDP fell into negative territory. The latest numbers highlight the fragility of the expansion but also raise questions about potential statistical quirks in government data that may be depressing first-quarter figures.
  • Falling Exports, Rising Imports Weigh on Economy: Trade was the biggest drag on top-line GDP figures in the opening months of the year. U.S. exports of goods fell by the most since the first quarter of 2009–the midst of the recession–while overall imports climbed. The widening deficit subtracted 1.9 percentage points from economic growth. A stronger dollar has tamped down overseas demand for U.S.-made goods while making foreign products cheaper to import. Meanwhile, congestion at West Coast ports constrained trade earlier in the year.
  • Corporate Profits Rebound: U.S. corporate profits rebounded in the first quarter of the year. Profits after tax, without inventory valuation and capital consumption adjustments, advanced 3.1% in the first quarter of 2015 from the fourth quarter of 2014, after falling 3% in the prior period. Profits were up a healthy 9.2% from the same quarter a year earlier, the biggest increase since 2012. That measure of corporate profits most closely matches what companies report in earnings statements. Profit data is not inflation adjusted.
  • The New Zealand dollar fell to a two-month low as upbeat US economic data reinforced expectations the Federal Reserve will hike interest rates this year, boosting demand for the greenback.
  • The kiwi touched 72.15USc, and was trading at 72.18USc at 8am in Wellington, from 73.13USc at 5pm yesterday. The trade-weighted index dropped to 75.60 from 76.15 yesterday.
  • The dollar index, which measures the greenback against a basket of currencies, touched a month high following a string of generally positive US data overnight. Reports showed US core capital goods orders rose 1% in April, ahead of the 0.3% expected, as the March figure was revised higher, while measures of consumer confidence, house prices and house sales also improved.

Deutsche Bank penalised over mis-stated accounts

Source: BBC Category: Banking Industry
  • Deutsche Bank is paying $55m (£35.7m) to settle civil charges for allegedly mis-stating financial reports.
  • The US Securities and Exchange Commission (SEC) investigated the German bank for the way it accounted for certain assets in reports filed during the financial crisis.
  • The SEC said it over-valued some of these and did not have sufficient collateral to cover potential losses.
  • It’s irritating to run across a bill and to realize it was due yesterday… or last week. If it’s a credit card bill, you may also have to pay a fee (sometimes, if it’s a rare slip-up, you can get it waived), and it can be especially scary to find an overdue bill if you have applied for credit or plan to in order to make a big purchase, like a house or vehicle. Readers often ask us how late a payment has to be before their creditors report it to the credit bureaus:
  • From Ig08: Hi, I have my credit card since last 6 years and have never missed any payments, but my last payment was due on 4th may and I paid it on 6th. … Does being one/two days late affect credit score?
  • From INVNOONE: Today [my bill] is 30 days late. When I called my bank they stated, “we cannot tell if it has been reported to the credit bureau.” Should I pay the loan today not knowing if they already reported it late to the credit bureau? This will leave me with very little money but I do care about my credit report.
  • The latest TransUnion Industry Insights Report found that the credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) remained steady at 1.37% in Q1 2015, unchanged year over year. Average credit card balance per borrower declined from $5,168 in Q1 2014 to $5,142 in Q1 2015.
  • Both credit card debt and delinquencies dropped on a quarterly basis. Credit card debt was down from $5,327 in Q4 2014 while the delinquency rate came down from 1.47% in Q4 2014, reflecting seasonality associated with improved payment patterns after the holidays.
  • The data provided are gathered from TransUnion's proprietary Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.
  • There is more to a positive consumer experience in banking than the time it takes to do a transaction or the design of a mobile app. In a rush to innovate and improve channel delivery, most banks and credit unions have forgotten to take the time to think of how money and feelings are entwined.
  • At what point did the banking industry forget that people have strong emotions about their money? Today, consumers can feel this glaring oversight at every level of their interaction with institutions that build products with no insight, or even consideration, as to how the products emotionally resonate with consumers.
  • Unlike other consumer product industries, most financial institutions don’t have teams of behavioural psychologists pouring over slides of human expressions around the services offered. The industry forgets about the way people react to different financial situations.
  • Asian shares slipped on Monday and the dollar stayed near a four-month low against a basket of major currencies after soft data raised doubts over whether the US economy has been growing despite US share prices standing at historic highs.
  • MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4%, although Japan's Nikkei share average edged up just 0.4% thanks to some companies' move to boost shareholder returns.
  • US industrial production unexpectedly fell for a fifth straight month in April while consumer confidence dropped to a seven-month low in early May, data showed on Friday, pushing down the dollar and US bond yields.
  • Interest rates on new credit card offers held firm Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.
  • The national average annual percentage rate (APR) remained stuck at 14.92 percent for the fourth consecutive week. None of the cards tracked by CreditCards.com advertised new interest rates. Issuers left promotional terms alone as well.
  • This is also the eighth week in a row card issuers have left 0 percent purchase offers and promotional balance transfer rates unchanged. The last time an issuer tracked by CreditCards.com changed a promotional offer was in the middle of March.
  • Weekly Rate Report
      Avg. APR Last week 6 months ago
    National average 14.92% 14.92% 15.00%
    Low interest 11.62% 11.62% 10.37%
    Balance transfer 14.04% 14.04% 12.82%
    Business 12.85% 12.85% 12.85%
    Student 13.14% 13.14% 13.14%
    Cash back 15.26% 15.26% 14.98%
    Airline 15.10% 15.10% 15.46%
    Reward 15.04% 15.04% 14.95%
    Instant approval 17.93% 17.93% 23.33%
    Bad credit 22.73% 22.73% 22.73%

  • Last month, we detailed the overall performance of the country’s largest investment banks in the global equity capital markets for Q1 2015, as a part of our article Global Equity Markets Witness Strong Underwriting Activity In Q1. Using equity market data compiled by Thomson Reuters, we estimated the quarter-on-quarter changes in equity underwriting fees for these banks and concluded that each of their fee figures would be lower year-on-year, although an improvement was expected quarter-on-quarter.
  • In this follow-up article, we look at the actual equity underwriting fees reported by the investment banks – Goldman Sachs, JPMorgan, Morgan Stanley, Bank of America-Merrill Lynch and Citigroup – and highlight the trends that emerge on a side-by-side comparison of these figures.
  • The global equity market saw companies around the world raise more than $242 billion through IPOs and follow-on offerings over the period – the highest on record for the first quarter of a year based on data compiled by Thomson Reuters.
  • While we’re supposed to be in a period of recovery from the Great Recession, the economy has been lagging more than expected lately. Does this lack of growth mean we’re slipping back into a recession?
  • If we are, it’s not one similar to what we saw in 2008 because the unemployment rate isn’t soaring up. Rather growth has been stalling this year, enough to make the Federal Reserve question whether to hike interest rates in June as it has said it wants to.
  • Growth stalled a lot in the winter. Annual gross domestic product growth dropped to 0.2%, and according to the Atlanta Fed’s GDPNow model, it’s only increased to 0.9% since. And the Washington Post suspects that any positive growth in the first quarter could be revised now that we know the U.S. trade deficit grew to the highest level in more than six years in March. The gap increased 43.1% to $51.4 billion, according to the Commerce Department, exceeding the estimates of 70 economists surveyed by Bloomberg.
  • Nearly half of Americans will not pay off their credit card balance in full this month. We are addicted to plastic, and credit card companies continue to make outsized returns because interest rates are so high. In a recent survey, 75% of people with credit card debt admitted to paying an interest rate of more than 15%.
  • Not only does debt impact us financially, it also impacts our physical health and wellbeing. Countless studies prove what we already know: being in debt causes significant stress. It keeps us up at night. And stress leads to all kinds of health issues.
  • For people looking to escape the trap of debt, they can easily get overwhelmed by the wide range of opinions, suggestions and products aimed at helping people become debt free. Today I will look at the benefits and risks of three popular approaches: balance transfers, personal loans and Dave Ramsey’s advice to destroy every piece of plastic you have.
  • Kim Hammonds is modernizing Deutsche Bank's technology with a set of dramatic choices to outsource some functions, bring others in-house and work extensively with tech startups.
  • Many banks are farming out the portions of technology work and infrastructure that are considered commodity functions and expanding relationships with innovative startups, in an effort to keep up with the digital times while keeping costs down. But Hammonds is moving at a faster pace than most large banks. Along the way, she's applying process improvement principles acquired during her days as an engineer and IT executive in automotive and manufacturing companies.
  • Hammonds, who has been with Deutsche a year and a half, is a mechanical engineer by training and held IT executive positions at Ford Motor, Dell, and Boeing, where she was CIO for five years. The background suits her role as CIO of a $1.7 trillion-asset financial institution with operations in 70 countries, she said.
  • The U.S. economy may not be benefiting as much as anticipated from the collapse in oil prices over the past 10 months. In fact, for oil-producing states, the decline of some 50% is taking a toll.
  • But one thing seems clear: The nation as a whole is nowhere near as susceptible to sharp swings in oil prices — one way or the other — as it was for decades.
  • That was the message from Jason Furman, the chairman of the White House Council of Economic Advisers and President Obama's chief economist, at a New York forum held by the Columbia University Center on Global Energy Policy.