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CMSPI – IAC State of the Industry Report
CMSPI – IAC State of the Industry Report
Section 2.1 – The Card Issuing Industry In Section 2.1 we look at the financial performance of the top 11 credit and debit card issuers globally; 6 of whom are based in China and 5 in the U.S. 45
Chase, Bank of America, Wells Fargo, Citi and Capital One all had valuation multiples of between 10 and 13x P/E as of the end of December 2023. Large Chinese banks typically trade at a larger valuation premium of over 20x P/E.
60%
50%
Total Card Volume (2022 USD billion)
Global Rank
Issuer
40%
1 2 3 4 5 6 7 8 9
China Construction
$4,003 $2,923 $1,532 $1,463 $1,277
ICBC
30%
Bank of China
20%
JPMorgan Chase Agricultural Bank Bank of America China Merchants
10%
$953 $910 $688 $620 $575 $564
0%
2019
2020
2021
2022
Wells Fargo
JPMorgan Chase
Bank of America
Wells Fargo
China Construction Bank
Agricultural Bank of China ICBC
Communications
Bank of China
China Merchants Bank
Bank of Communications
10 11
Capital One
Citigroup
Capital One
Citi
Table 2.1 – 11 of the Largest Issuers Please note: Many issuers have substantial revenue streams outside of their issuing portfolios. These include interest and overdraft income. In this section, we analyze the financials for the entire entity, which will include this non-issuing income.
Graph 2.2 – Operating Margin by Issuer (2019-2022) 47
Key takeaways: 46 • The card issuing model remains profitable, with circa 35% average operating margins reported • JPMorgan Chase is the strongest U .S. entity in terms of market share and profitability • Issuers consistently report valuation multiples of 10-11x earnings
As the Graphs below show, revenue and operating profits have continued to grow for many card issuers in recent years, despite financial hits for some banks at the start of the covid-19 pandemic in 2020. Operating margins remain solid at most banks, with 35%+ margin numbers consistently posted between 2019 and 2023. Meanwhile, valuations remain remarkably consistent: U.S. banks JPMorgan
45 Euromonitor 46 It’s important to note that large issuing banks may perform several functions aside from card issuing, including net interest payments, overdraft fees and in some cases investment banking activities such as corporate finance and equity/ bond sales & trading. Interchange fee revenue may only constitute a small portion of their overall revenue (see Section 2.1.3).
47 Company 10ks
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