New debit card interchange rules unfolded during the last quarter of a year already plagued by a sluggish economy, making it difficult for Bank of America Corp.’s Card Services unit to deliver positive fourth-quarter earnings.

A debit card interchange cap established through the Durbin amendment to the Dodd-Frank Act reduced card revenue by $430 million, Charlotte, N.C.-based BofA noted Jan. 19 in its fourth-quarter earnings report.

But the Durbin amendment changes are “fully embedded in the fourth-quarter results,” allowing the bank to move forward with a new earnings base from which to build on, bank executives told industry analysts during a Jan. 19 earnings conference call.

In addition, the bank has moved on from the bad public relations that occurred when it had to pull back from an attempt to incorporate a $5 fee to customers for debit card use that would have started this year (see story).

In fact, the bank initially stubbed its PR toe by announcing its new fee intention just days before the Durbin fees went into effect Oct. 1 (see story).

Ultimately, the reductions in income from the debit card interchange rate reduction, combined with less credit card interest, caused the bank’s card services unit to report a 24.3% drop in fourth quarter revenue, to $4.06 billion from $5.36 billion during the same period last year. Net income also fell by 20.9%, to $1.02 billion from $1.29 billion.

Bruce Thompson, BofA chief financial officer, told analysts the economy continues to hold the key to brighter earnings numbers.

“Most of the line items in our earnings report, whether it be card income, service charges, investment or brokerage, tend to be very correlated with the economy,” Thompson said. “If we see economic growth, we would expect that to translate into higher revenues. Plus, at this point, Durbin is fully embedded in the fourth-quarter results so we have a solid base to work with there.”

Last month, BofA sold $700 million in credit card assets to U.S. Bancorp, again indicating some struggles with credit card portfolios (see story).

BofA President Brian Moynihan told analysts the bank now will focus on its retail strategy without the major regulatory hurdle it faced in 2011.

“In this quarter, you see the last part of the regulatory costs coming through–that is the Durbin interchange changes,” Moynihan said. “We have now absorbed the Durbin, and all of the change that occurred over the last couple of years.”

Though card earnings decreased because of Durbin, Thompson informed analysts that card new-account business grew more than 50% from a year ago.

Average loans for the quarter were $121.1 billion, down 11.4% from $136.7 billion, caused by higher payment volumes, charge-offs, continued noncore portfolio runoff and divestures, BofA reported.

On a positive note, credit quality within the card business continued to improve in the fourth quarter, Thompson said. “U.S. credit card losses improved for the ninth consecutive quarter, and our 30-plus-day delinquency rate declined for the 11th consecutive quarter,” he said.

Thompson reminded analysts that international credit card results for the quarter were listed as part of “All Other” business, a category that showed $1.4 billion in net income, up 149% from $563 million a year earlier. Bank executives attributed the rise to higher revenue and lower provisions for credit losses internationally.

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