Commonwealth Bank of Australia refines home loan
offering…
Crédit Agricole looks to
raise $9.1bn in capital…
Alpha Bank’s
sports tour extends to Bulgaria,
Romania…
WaMu thinks big on MasterCard
PayPass…
RBC offers free computer with
packaged account…
STRATEGY
Chase has ‘invested’ $338bn in low-income US families since
2004
JPMorgan Chase has reported that four years into a 10-year, $800
billion commitment to offer beneficial lending rates to low- and
moderate-income families and community businesses, it has so far
channeled $338 billion into the initiative.
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Chase says it has invested 42 percent of that in three crucial
areas: $258 billion in mortgages to low and moderate-income
neighbourhoods and to lower-income and minority borrowers; $63
billion in small business lending, and $17 billion in community
development lending and investment.
“Helping families buy a home they can afford over the long term
remains a crucial part of our commitment to communities,” said
Charlie Scharf, CEO of Chase’s Retail Financial Services
unit.
In 2003, Citi established a seven-year, $200 billion affordable
mortgage programme; it says it has already surpassed the goal,
having lent approximately $222 billion.
DISTRIBUTION
Citi links with Indosat to roll out m-banking service in
Indonesia
Citi and Indonesia telecoms provider Indosat are to team up to
provide mobile banking services in Indonesia.
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By GlobalDataCustomers of the bank who belong to the Indosat mobile network will
be able to apply for loans and discover the location of nearby Citi
branches and ATMs through their mobile phones.
Eligible customers will also be able to manage their finances via
Citi Mobile by accessing balance and transaction information for
both bank and credit card accounts.
The scheme follows on from the launch of Citi Mobile in the US in
April 2007, a more comprehensive service that allows US customers
to pay bills using their mobiles.
Last month Citi announced that it would begin trialing mobile
person-to-person payment service in the US in summer 2008.
PRODUCTS
Commonwealth Bank of Australia refines home loan
offering
Commonwealth Bank of Australia (CBA), Australia’s largest bank by
market capitalisation (see All change in Australia?), has
unveiled a new home loan offering that will speed up the provision
of home loan documents to customers.
The ‘simple loans’ initiative is designed to provide customers with
on the spot loan documentation printing in the bank’s branches, and
follows earlier home loan process improvements such as the
revamping of online applications. Online customers now have access
to an online home loan specialist, with the application itself
taking around five minutes.
Half-year retail banking figures for CBA show strong growth in home
loan volume, up 14 percent in the six months to December 2007.
Revenue from home loans was up 4 percent over the same period to
A$714 million ($675 million). At 31 December, CBA had an 18.8
percent share of the domestic home loan market.
TRENDS
US retirement assets growth slows to
$1.1trn
US retirement assets rose by $1.1 trillion in 2007 to $17.6
trillion, but failed to match the growth of previous years, the
Investment Company Institute (ICI) has reported.
The 7 percent increase, which reflects contributions and asset
appreciation, lagged the growth in retirement assets from 2005 to
2006, when they grew by $1.7 trillion, a near 12 percent increase.
However, retirement assets continue to make up an increasingly
significant portion of US consumer wealth, the ICI said.
“Expanding retirement wealth, particularly in defined contribution
plans and IRAs, accounted for half of the increase in households’
financial assets last year,” stated ICI chief economist Brian
Reid.
“Retirement assets now account for nearly 40 percent of US
households’ financial assets.”
RESULTS
Strong FY2007 income gains for India’s banks
A strong round of annual results from India’s banks has been led by
State Bank of India (SBI), which reported a 48.2 percent increase
in net profits for the year to 31 March, rising to INR45.4 billion
($1.07 billion).
The bank recorded especially strong growth in deposits, which rose
by 23.4 percent to INR5.37 trillion over the past 12 months. Home
loans rose by 18.7 percent. SBI chairman, OP Bhatt, told a news
conference that a strong push in retail loans was responsible for
the strong growth figures.
India’s Housing Development Finance Corporation, a leading mortgage
lender in the country, reported a 55 percent rise in net profit,
rising to INR24.4 billion as at 31 March. Total income rose by 39.8
percent to INR81.2 billion from INR58.6 billion in 2006.
During the year, total assets at the group, which is 11.75 percent
owned by US banking giant Citi, increased to INR810 billion, a rise
of 29 percent.
At Canara Bank, net profit rose to a record INR15.6 billion, a 10
percent rise year-on-year. Total income rose by 28 percent from
INR128 billion to INR164 billion. Core deposits rose by 25 percent
on the year, the bank added.
Last month ICICI Bank, the biggest private sector bank in India,
reported a 34 percent increase in net profit to INR41.5 billion
(see RBI 591). It benefitted from a 27 percent rise in
current and savings account deposits, which totalled $15.9 billion
and made up 26 percent of total deposits as at 31 March.
ICICI says it now has 1,308 branches in India compared with 755 a
year earlier – the second largest network in India after State Bank
of India’s 10,000 branches.
PRODUCTS
BofA’s Keep the Change savings programme passes $1bn
landmark
Bank of America’s Keep the Change savings programme, launched with
a flurry of publicity in October 2005, has resulted in US consumers
saving more than $1 billion in customer round-ups and bank-matching
funds, the bank has declared.
Over eight million US consumers are now enrolled in the Keep the
Change scheme, which sees consumers’ debit card purchases rounded
up to the nearest dollar with the difference being automatically
transferred to users’ savings accounts. Bank of America (BofA)
contributes an equal amount for the first three months and 5
percent thereafter, to a total of $250 per year.
“Customers continually express their appreciation for Keep the
Change as it has enabled them to grow their personal savings in a
simple and straightforward manner,” said Jon Wilk, deposits balance
growth executive at BofA.
The success of the programme, which has since been copied by other
banks including Lloyds TSB in the UK, is in part down to BofA’s
continued expansion. In February, at which point 6.6 million
Americans had enrolled and $778 million had been saved, BofA made
Keep the Change available at LaSalle Bank branches in
Michigan.
BofA bought Chicago-based LaSalle from ABN AMRO for $21 billion in
October 2007.
STRATEGY
Crédit Agricole looks to raise $9.1bn in
capital
France’s second-biggest banking group by assets, Crédit Agricole,
has surprised markets by announcing a €5.9 billion ($9.1 billion)
rights issue to beef up its capital after write downs at its Calyon
investment bank.
After a string of similar capital raising moves by primarily US and
UK based banking groups such as Washington Mutual, Royal Bank of
Scotland and Citi, the size of the Crédit Agricole deal – larger
than Wachovia’s $7 billion demand in April, for instance – has
unnerved analysts and comes at a time when local rival BNP Paribas
remains relatively untouched by the global credit crisis (see
Advantage BNP Paribas). Société Générale reported a 23 percent
fall in first-quarter net profit, but better than analysts had
expected.
Crédit Agricole said the write down will knock first quarter
profits down to €892 million, a drop of 66 percent year-on-year. In
March, it reported a fourth-quarter net loss of €857 million.
Investment bank Dresdner cut its rating on Crédit Agricole to
“reduce” from “hold” and said the bank remained in its
“unattractive” portfolio. It said Crédit Agricole’s capital
increase could dilute its 2009 earnings per share by 12 to 22
percent.
RESULTS
Despite $3.2bn new US write down, HSBC’s first quarter
profit rises
HSBC has reported higher first-quarter profits even after taking a
further $3.2 billion hit on sour US loans. The group said pre-tax
profits were up in all major emerging markets in Asia-Pacific, the
Middle East and Latin America; its European businesses also
performed well, with the UK retail business increasing pretax
profit despite a weak banking environment in the country.
Loan impairment charges in its US consumer finance business were in
line with expectations and compared with $1.6 billion recorded in
Q1 2007 and $4.6 billion in Q4 2007.
However, HSBC did warn that the deterioration in the US housing
market will extend into 2009, adding, “it is also clear US economic
growth has slowed and there is an increased likelihood of a
recession this year”.
As of 31 March, 5 percent of HSBC’s mortgages sourced from its US
branch-based consumer lending business were two months or more
overdue, compared with 4.2 percent at 31 December 2007. At the end
of the quarter, the two months or more delinquency rate for credit
cards was 5.9 percent and 3.6 percent for private label cards,
compared with 5.8 percent and 3.4 percent, respectively, at the end
of 2007.
HSBC has so far written off around $16 billion from subprime US
investments, one of the biggest casualties of the credit plunge.
Citi has written off over $40 billion, UBS around $38 billion and
Bank of America, $14 billion.
STRATEGY
Maybank & ICD in deal to create global takaful
insurance business
Maybank and the Islamic Corporation for the Development of the
Private Sector (ICD) have signed a memorandum of understanding to
jointly explore the feasibility of establishing an international
takaful (Islamic insurance) holding company with the aim
of creating a global leader in the takaful business. ICD
is the commercial arm of the Islamic Development Bank.
The strategic partnership proposes to leverage on Maybank expertise
in the takaful business as well as ICD’s comprehensive
knowledge of the Islamic markets in its member countries. The plan
is for the new holding company to commence operations by end
2008.
Maybank chairman Mohamed Basir Ahmad said: “ICD is an ideal partner
for Maybank to work with, to take takaful services
global… We believe the opportunities are tremendous given that
the global takaful business is expected to grow to over
$15 billion by 2015 from $2 billion currently, as well as the
growing acceptance and importance of Islamic insurance schemes
globally.
PAYMENTS
WaMu thinks big on MasterCard PayPass
Washington Mutual (WaMu), one of the largest retail and small
business banks in the US, is set to become the country’s largest
issuer of MasterCard contactless PayPass cards. WaMu, which issued
the first of its WaMu with PayPass debit cards in January this
year, plans to have a total of between 12 million and 15 million in
issue by year-end.
To put the scale of WaMu’s planned roll out of PayPass cards in
perspective, there were according to MasterCard 23 million PayPass
cards and devices in circulation globally in the fourth quarter of
2007.
“Our research shows card-holders who use their MasterCard PayPass
cards tend to make them their preferred cards, which will deliver
an economic benefit to WaMu by driving its cards to the top of
wallet,” said MasterCard Worldwide head of US relationship
management, Bill Mathis.
He added that, in his view, WaMu’s roll out of PayPass cards “will
greatly accelerate the shift by consumers and merchants to
contactless payments”.
PAYMENTS
European rival to Visa, MasterCard on the
cards
The European Commission (EC) has said talks are currently being
held with several major European banks regarding a new payments
card network that could rival Visa and MasterCard. According to the
Financial Times, Germany’s Commerzbank and Deutsche Bank
alongside French banks Société Générale and BNP Paribas were
preparing to decide on launching a new card network over the coming
months.
“We have had a series of contacts with banks and other interested
parties about payments cards,” said commission spokesman for
competition matters Jonathan Todd. “Members of this project have
approached the commission, but they are not the only ones.”
The tentative name for the scheme is Monnet – after Jean Monnet,
one of the key architects of the European Union. The enthusiasm of
the German and French banks to go ahead depends on how high the
commission would accept interchange fees to be set, according to
the Financial Times. Should no clear solution be agreed upon by the
banks and regulators, the banks will in all likelihood continue to
use the existing Visa and MasterCard networks.
STRATEGY
Bank of East Asia gets permission to issue debit cards in
China
Hong Kong-headquartered Bank of East Asia has become the first
non-Chinese bank to issue debit cards in mainland China. Other
foreign groups which have also applied to offer yuan-denominated
debit cards include HSBC, Citi and Standard Chartered, all of whom
are expected to receive regulatory approval.
“We will target both our existing customers and new clients (in
China) for the local currency yuan-denominated debit card
issuance,” the bank said in a statement.
“[Bank of East Asia] has spent a big amount of financial and human
resources in the preparations, and the data centre for the card
business will be based in Shenzhen,” it added.
The decision by the Chinese government to open up its domestic
market is in keeping with its policy of promoting cashless payments
and its World Trade Organisation commitments. Last year,
Bloomberg reported China wants 30 percent of retail sales
to be made through debit and credit cards in 2008, up from 10
percent in 2005.
SPONSORSHIP
Alpha Bank’s sports tour extends to Bulgaria,
Romania
Alpha Bank’s longstanding Sports Panorama initiative, now in its
eighth year, which the Greek bank describes as a tour showcasing
popular sports and spectacular activities such as windsurfing,
rowing, trampolining, shooting and NASA training, is to extend
beyond the Greek border this year and visit four major cities in
each of Bulgaria and Romania during May and June. From July until
October, the tour visits 14 locations in Greece, with athletes
offering demonstrations and coaching in the various sports.
Sports sponsorship has played a key role in Alpha’s recent
marketing – last year the bank signed up to be the official banking
partner of European basketball’s Euroleague Final Four competition.
In 2004, the bank was the official banking partner of the Athens
Olympic Games.
ADVERTISING
Keep the Change and NASCAR underpin latest BofA
campaign
Bank of America has kicked off a major integrated marketing
campaign, incorporating new commercials which will air on national
and local television as well as fresh ads created for radio, print
and online channels.
The TV ads are scheduled to run on major domestic networks such as
ABC, CBS, NBC, Fox, CNBC, MSNBC and Discovery and will promote the
bank’s new Select Money Market Savings account as well as its
successful Keep the Change savings programme (see
above).
Additional TV commercials promote BofA’s m-banking offering and
affinity banking products linked to the US Olympic team and Major
League Baseball.
BofA has also launched its first NASCAR-themed TV Ad, flagging up
the bank’s sponsorship of the sport as well as its various NASCAR
Banking range of products. “Our new commercial creates a solid
connection between fans’ passion for their favourite driver and our
NASCAR Banking suite of products.
“NASCAR is a unique part of America, and we’re proud to showcase
that fan spirit and loyalty in our advertising,” Anne Saunders,
BofA brand and advertising executive told RBI.
SPONSORSHIP
Wachovia launches Save Like A Champion
Wachovia, the US’s fourth-largest retail banking group, has set up
a marketing programme, called Save Like A Champion, tied to its
title sponsorship of the recent Wachovia Golf Championship. The
objective is to promote its Way2Save automatic savings programme
(see RBI 585).
The Save Like A Champion promotion gives customers with a Way2Save
savings account a monthly interest rate for the months of June,
July and August that equals the under par score of the tournament
winner. Anthony Kim won the event on 4 May on 16 under par.
“This unique promotion encourages consumers to sign up for a
Way2Save account, while also creating excitement for tournament
attendees and viewers as they anticipate and predict what their new
interest rate will be,” said the bank’s sponsorship and alliances
manager, Francie Gottsegen.
Outside the promotional period, Way2Save customers earn 5 percent
interest plus a 5 percent annual bonus in the first year, with the
interest rate dropping to 2 percent with a 2 percent annual bonus
in the second and third years, up to a maximum bonus of $300 per
year.
TECHNOLOGY
BBVA to look at modern forms of web marketing and
communications
Spain’s second-largest banking group, BBVA, believes an innovative
use of online marketing which adapts to consumer behaviour will
become a key factor in differentiating the bank from its
rivals.
According to the group, its objective is to make people’s lives
easier by means of innovative solutions linked to new forms of
communications such as Web 2.0. “Innovation must be in the DNA of
the company. We must make full use of the web as a digital tool to
democratise products and services,” said Manuel Castro, BBVA’s
innovation and development manager.
The bank has recently begun promoting in-house communication
projects such as employee blogs and internet TV, and externally has
launched Webzine, a digital magazine for young people which offers
content including music, selected videos and sports
programmes.
BBVA will also promote its Activba project aimed at a non-technical
audience as well as Planta 29, a programme designed to appeal to
experts in Web 2.0 incorporating radio, blogs and professional
software.
LOYALTY
Lloyds TSB offers AirMiles mortgage
The UK’s fifth-largest retail bank, Lloyds TSB, has announced an
extension of its AirMiles partnership, with the launch of an
AirMiles mortgage. Customers signing up for the new product will
receive a lump sum of 6,000 AirMiles on completion of their
mortgage and earn an additional 50 AirMiles each month for the life
of the fixed rate.
Lloyds TSB became AirMiles’ official financial services partner in
the UK in June last year, in place of NatWest, the English retail
subsidiary of Royal Bank of Scotland (see RBI 571). The
AirMiles mortgage range debuted on 7 May and is available on a
range of three year fixed rate products.
“[Customers] enjoy the idea of getting something for free and in a
time when mortgage payments are a top priority, this offer enables
them to earn rewards on their essential spending,” said Alison
Burns, director of network mortgage sales at Lloyds TSB.
Lloyds TSB believes its Air Miles mortgage incentive is a first in
the market. BMO Bank of Montreal (BMO) in Canada, which has based
its retail banking recovery on its tie-up with Air Miles (see
RBI 590), offers AirMiles rewards only when customers first
sign up for a mortgage.
PROMOTION
RBC offers free computer with packaged
account
Canada’s RBC Royal Bank (RBC) is tempting customers who sign up to
its Signature No Limit Banking account using RBC’s CustomSwitch
service between 1 May and 12 September with the offer of a free
Asus Eee personal computer. The bundled account costs C$13.95 a
month.
The promotion also seeks to boost paperless banking, as customers
signing up will become an RBC online banking client.
“Our research shows that Canadians want their bank to show
appreciation for their business, and this has been our guiding
principle ever since we revamped our personal deposit account line
up and included rewards such as gift cards and rebates,” said Chris
Barber, director, RBC’s personal banking accounts director.
