American Express Co. and Capital One Financial Corp. may fare relatively better this year than some other credit card issuers, thanks to their lower dependence on spread interest income, Fitch Ratings Inc. said in a report issued today. "Unlike a lot of other large credit card issuers, we expect that AmEx will make money in their credit card business this year," Meghan Crowe, senior director in Fitch's financial institutions group, tells CardLine. Cap One also may eke out a profit, if present trends continue, while issuers that depend more heavily on spread interest income in their portfolios may not, Crowe says. JPMorgan Chase & Co. said its card unit is unlikely to post a profit this year (CardLine, 4/8). In its review of first quarter credit card asset quality, Fitch says the economic downturn is driving tighter issuer underwriting standards and lower credit card spending volumes, which in turn is shrinking card issuers' portfolios. As a result, portfolio contraction will reduce funding needs across the credit card industry throughout the remainder of the year, Fitch says. Though portfolio contraction is likely to magnify the negative effect of rising credit card charge-offs in upcoming quarters, AmEx and Cap One are in better shape than some of their peers because they have "a bigger buffer in terms of higher capital and liquidity on hand, so they are not as dependent on the capital markets for funding," Crowe says. Although the credit card industry as a whole will continue to be hammered by rising card losses throughout the year, AmEx continues to post "relatively attractive" results, given the fact that its transactions tend to generate higher fees and that it relies less on interest spread income than some of its peers do, Fitch says. Fitch put a negative ratings outlook on both AmEx and Cap One earlier this year, but Crowe says the two issuers are "holding steady for now, which is a positive during this economic cycle."