Among Consumer Lenders, Safety Counts

With personal bankruptcies on the rise and more consumers defaulting on their loans, it's become a tough environment for credit card lenders. But as Thomas Weisel analyst Matthew Park points out, not all consumer finance firms are equal.

Although subprime lenders, companies that lend money to people with checkered credit histories, are likely to endure further pressure in the months ahead, Park believes that prime lenders should fare much better. As a result, he raised his investment rating on MBNA Corp.(KRB Quote) to buy from attractive, and downgraded Household International (HI Quote) to market perform from buy on Monday.

"We suggest the valuation of prime consumer lenders would likely be more resilient to further investor concerns over consumer credit," he said in a research note. "We believe that most of the remaining credit quality issues are in the subprime area." ...