Alliance Data Provides Card Services Performance Update For August 2020

Rhea-AI Summary

Alliance Data Systems Corporation (NYSE: ADS) released its Card Services performance metrics for the month and eight months ending August 31, 2020. The average receivables decreased by 13% year over year to $15.2 billion. Net charge-offs for August reached $81.8 million, representing 6.5% of average receivables. The delinquency rate improved to 4.5% from 5.6% the previous year. The changes reflect the impact of COVID-19 forbearance programs offered to cardholders, which may have influenced the delinquency metrics.

Positive

• None.

Negative

• Average receivables decreased by 13% year over year.
• Net charge-offs of $81.8 million in August.
• 6.5% net charge-offs as a percentage of average receivables, higher than the previous year's 5.7%.
• Delinquency rate improved but still indicative of underlying credit issues.

COLUMBUS, Ohio, Sept. 14, 2020 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE: ADS), a leading provider of data-driven marketing, loyalty and payment solutions, provided an update on its Card Services segment. The following tables present the Company's net charge-offs and delinquency rate for the periods indicated.

		For the month ended August 31, 2020			For the eight months ended August 31, 2020
		(dollars in thousands)
Average receivables		$	15,222,257		$	16,731,335
Year over year change in average receivables			(13)%			(1)%
Net charge-offs		$	81,823		$	798,694
Net charge-offs as a percentage of average receivables (1)			6.5%			7.2%

(1)  Compares to 5.7% and 6.1% for the month and eight months ended August 31, 2019, respectively.

 

	As of August 31, 2020			As of August 31, 2019
	(dollars in thousands)
30 days + delinquencies - principal	$	659,943		$	944,717
Period ended receivables - principal	$	14,659,967		$	16,859,127
Delinquency rate		4.5%			5.6%

In response to the COVID-19 pandemic, the Company has offered forbearance programs to affected cardholders, which provide for short-term modifications in the form of payment deferrals and late fee waivers to borrowers who were current as of their most recent billing cycle prior to the announcement of the forbearance programs. Those accounts receiving forbearance relief may not advance to the next delinquency cycle, including eventually to charge-off, in the same timeframe that would have occurred had the forbearance relief not been granted. Thus, delinquency rates may be impacted by the forbearance relief granted in connection with the COVID-19 pandemic.

About Alliance Data

Alliance Data^® (NYSE: ADS) is a leading provider of data-driven marketing, loyalty and payment solutions serving large, consumer-based industries. The Company creates and deploys customized solutions that measurably change consumer behavior while driving business growth and profitability for some of today's most recognizable brands. Alliance Data helps its partners create and increase customer loyalty across multiple touch points using traditional, digital, mobile and emerging technologies. A FORTUNE 500 and S&P MidCap 400 company headquartered in Columbus, Ohio, Alliance Data consists of businesses that together employ over 8,500 associates at more than 50 locations worldwide.

Alliance Data's Card Services business is a provider of market-leading private label, co-brand, and business credit card programs. LoyaltyOne^® owns and operates the AIR MILES^® Reward Program, Canada's most recognized loyalty program, and Netherlands-based BrandLoyalty, a global provider of tailor-made loyalty programs for grocers. More information about Alliance Data can be found at www.AllianceData.com.

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Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as "believe," "expect," "anticipate," "estimate," "intend," "project," "plan," "likely," "may," "should" or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results, initiation or completion of strategic initiatives, future dividend declarations, and future economic conditions, including, but not limited to, fluctuation in currency exchange rates, market conditions and COVID-19 impacts related to relief measures for impacted borrowers and depositors, labor shortages due to quarantine, reduction in demand from clients, supply chain disruption for our reward suppliers and disruptions in the airline or travel industries.

We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. These risks and uncertainties include, but are not limited to, factors set forth in the Risk Factors section in our Annual Report on Form 10-K for the most recently ended fiscal year, which may be updated in Item 1A of, or elsewhere in, our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K. Our forward-looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Contact:	Investors/Analysts
	Tiffany Louder
	Alliance Data
	214-494-3048
	Tiffany.Louder@AllianceData.com
	Media
	Shelley Whiddon
	Alliance Data
	214-494-3811
	Shelley.Whiddon@alliancedata.com

 

 

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SOURCE Alliance Data Systems Corporation

FAQ

What are Alliance Data Systems Corporation's recent performance metrics for Card Services?

In August 2020, Alliance Data reported average receivables of $15.2 billion, with net charge-offs of $81.8 million, indicating a net charge-off rate of 6.5%.

How did average receivables change for Alliance Data Systems (ADS) in 2020?

Average receivables decreased by 13% year over year as of August 31, 2020.

What was the delinquency rate for Alliance Data Systems in August 2020?

The delinquency rate improved to 4.5% as of August 31, 2020, down from 5.6% the previous year.

What impact did COVID-19 forbearance programs have on Alliance Data Systems' metrics?

The forbearance programs may have influenced delinquency rates, allowing accounts to remain current despite financial distress.