Toronto-Dominion Bank is shooting to quadruple receivables in its private-label credit card business in the United States and Canada and will try to grab market share from competitors that may be retrenching, an executive said Monday.
Marc G. Sczesnak, the president of what is now TD Retail Card Services, said Toronto-Dominion is investing "multimillion dollars" in technology, risk management, and marketing. It aims to boost private-label card receivables to $2 billion by 2011, from $500 million now, he said.
Mr. Sczesnak spoke Monday as the company announced the rebranding of Shoppers Charge Accounts Co. to TD Retail Card Services. Toronto-Dominion's U.S. banking arm, TD Banknorth Inc. of Portland, Maine, acquired Shoppers with Hudson United Bancorp of Mahwah, N.J. The Canadian company had always planned to expand it, Mr. Sczesnak said.
Though some financial executives have voiced concern about consumers' financial health in the current environment, Mr. Sczesnak said he is confident now is the right time to expand. "Credit quality is superb" and "month-over-month trends are looking pretty good," so asset quality is not a hindrance to expansion, he said. "We are not seeing any significant deterioration that would give us reason for concern."
TD Retail Card Services' average FICO score is about 715.
Profit-enhancing measures include a practice that is common in the industry but new for TD Retail Card Services: charging a higher interest rate to customers who pay their bills late.
Mr. Sczesnak said there is also an opportunity to pick up market share if companies like Citigroup Inc. and HSBC Holdings PLC pull back to focus more on preserving capital.
General Electric Co.'s consumer finance division, meanwhile, is trying to unload its private-label cards business. Keith S. Sherin, GE's chief financial officer, said during a conference call with investors in April that it was "on track" to sell the private-label unit in the second half.
"HSBC remains committed to the private-label credit card business and to each of the industry segments we serve," the company said Monday. A Citigroup spokesman declined to comment.
TD Retail Cards Services will now report directly to Toronto rather than to TD Banknorth in Portland, Mr. Sczesnak said. TD Banknorth has a consumer credit card business it picked up with its March acquisition of Commerce Bancorp Inc. of Cherry Hill, N.J., but executives at Toronto-Dominion have decided to keep the units separate.
"By remaining a stand-alone business unit, it enables us to remain nimble and quick with clients, and that is really key in our strategy," Mr. Sczesnak said.
He said a strategic growth plan for the unit is nearly complete, and he called the rebranding the first step toward expansion. "It indicates the parent's desire to support and grow the business."
Mr. Sczesnak said he believes Toronto-Dominion's $497.1 billion-asset balance sheet will help to attract more customers who might have been uncomfortable dealing with a smaller company, he said.
In October, TD Retail Card Services expanded into Canada, where Toronto-Dominion previously did not have a private-label cards unit, though the move was not officially announced until Monday. Mr. Sczesnak said the unit would shortly announce its first contract, with a gardening retailer in Canada. "Canada is a significant growth opportunity for us."
He said the unit is "big" in lawn and garden financing in the United States and has private-label card relationships with retailers to finance lawn mowers and tractors for wealthy "weekend warriors" with large estates, who are a good credit risk.
Another TD Retail Card Services product is the Yard Card credit card, offered directly to consumers through 5,000 gardening retailers. The unit issues private-label cards for Pfaltzgraff Co., the kitchenware brand, the watchmaker Movado Group Inc., and Bang & Olufsen, a retailer of high-end electronics.