MBNA Records Gains

MBNA Corporation has reported that its profits for the first nine months of 2000 reached $888.9 million, up 26.1 percent from the same period last year. Earnings have risen an average of 25 percent in each of the 39 quarters since its founding. Over the two most recent nine-month periods, MBNA appears to have adopted a strategy of reducing credit risk while accepting a lower gross yield on its portfolio. Net credit losses on the firm's managed loans (including loans held for securitization, loan portfolio and securitized loans) fell slightly from 4.67 percent to 4.65 percent of outstandings. But, credit losses fell from 4.34 percent to 3.88 percent of outstandings. These gains were accompanied by a reduction in the gross yield on managed receivables from 7.33 percent to 7.10 percent. The risk-return trade-off may reflect the significant change in the firm's portfolio.