MBNA Profits Rise, Shares Fall

Credit card lender

MBNA

(KRB)

reported first quarter earnings that rose 20% from a year ago. But on a down day for the markets, it was not enough to lift the stock.

MBNA said earnings were $369.9 million, or 42 cents a share, in the first quarter, compared to $311.1 million, or 35 cents a share, a year ago. The results were in line with analysts' estimates.

Shares of MBNA closed down $1.70, or 4.4%, at $37.25, but they're up 50% since a September low.

"They traded down because their numbers were not a home run," said Meredith Whitney, an analyst at Wachovia Securities. "Some of the underlying data points may have disappointed investors."

Net interest margin, which is the spread between MBNA's cost of borrowing and what it charges customers, contracted slightly to 8.84% in the first quarter from 9% in the fourth quarter.

When interest rates were falling last year, net interest margin boosted MBNA's revenue growth. "Their debt costs declined quicker than their asset yields," said Vincent Daniel, an analyst at Keefe, Bruyette & Woods. "But now, it's safe to assume that rates aren't going down any further."

MBNA said managed loan losses, or loans that it does not expect to repay, rose to 5% in the first quarter from 4.35% in the fourth quarter, but it said they were lower than industry levels.

The credit card lender added 2.4 million customers in the quarter, in a difficult environment. And it said would begin offering a quarterly dividend of 10 cents a share on June 14, 2002.

Other lenders finished lower as well on Thursday, with

Capital One Financial

(COF) - Get Report

off 3.3% at $62.25.