WILMINGTON, Del. - MBNA Corp. said yesterday that its earnings rose 9.3 percent as credit quality improved, but it will incur as much as $350 million in costs as it sheds about 1,000 jobs.
The world's largest independent charge-card company said its fiscal third-quarter net income increased to $768.9 million, or 59 cents a share, from $703.5 million, or 54 cents, a year earlier, topping estimates by a penny a share.
MBNA is cutting jobs as growth in loans wanes, a result of its decision to back away from zero-interest credit-card promotions. Loans, which increased 3 percent to $121.6 billion as of Dec. 31, would have been $4 billion higher if MBNA had kept up the promotions, Chief Financial Officer Kenneth Vecchione said.
"It's been needed," Robert Millen, who helps manage $3.2 billion for Jensen Portfolio Inc., said of the job cuts. "They have a lot of competition and they need to reposition their company to have a cost structure for a slower-growth market."
MBNA estimated that the voluntary retirement program, which targets about 3 percent of the work force, will save $150 million this year and $200 million in 2006. The pretax costs will come during the first quarter. MBNA also said it will buy back as much as $2 billion of its shares through 2006.
"Our hiring, our staffing got ahead of our loan growth," Vecchione said.
MBNA's shares rose 24 cents yesterday to close at $27.44 on the New York Stock Exchange.