Signs of life in bank marketing spending?

Recent bank advertising campaigns (from Bank of America, American Express, Chase, Discover, and Visa) is leading to speculation that banks are once gain increasing bank advertising/marketing spend.  However, the latest financial data does not support this contention.  Most financial institutions reported year-over-year declines in advertising/marketing spend in 3Q09, and for many of these, the level of the y/y decline in 3Q09 was higher than that reported in 2Q09.  An exception was U.S. Bank, which grew ad spending 83% y/y to $137MM.

The following table tracks trends in advertising/marketing spend for some leading U.S. financial institutions:

Financial Institution

3Q09 Advertising/
Marketing Spend, $MM

Y/Y Change in 3Q09

Y/Y Change in 2Q09

American Express




Bank of America




JPMorgan Chase












Wells Fargo




U.S. Bank




Morgan Stanley




Capital One




















Leading credit card issuers reducing outstandings

Coverage of 3Q09 results from the leading U.S. credit card issuers focused–not surprisingly–on trends in their charge-off and delinquency rates, but many of these issuers have been significantly reducing outstandings in recent quarters. This is due to reduced acquisition activity, as well as charge offs.  The following is a list of end-3Q09 managed outstandings for the leading issuers, along with q/q and y/y changes:

  • Chase: $165.2 billion in EOP managed outstandings; down 4% q/q; down 11% y/y
  • Bank of America: $164.5 billion; down 3% q/q; down 10% y/y
  • Citi (Citi-Branded Cards in North America): $83.7 billion; up 2% q/q; down 1% y/y
  • Capital One (domestic credit card): $61.9 billion; down 4% q/q; down 11% y/y
  • American Express (U.S. Card): $51.9 billion; down 4% q/q; down 19% y/y
  • Discover (U.S. Card): $48.1 billion; down 2% q/q; down 2% y/y

And this reduction in outstandings should continue for the next few quarters, as issuers continue to pull back on acquisition activity, charge-offs remain high, and new credit card legislation comes into force.

However, it is worth noting that some of the second-tier bank card issuers, who are focused mainly on cross-selling existing bank customers, have grown outstandings:

  • Wells Fargo: $23.1 billion; up 2% q/q; up 16% q/q
  • U.S. Bank: $16.1 billion; up 10% q/q; up 31% y/y (in part due to an acquisition of card portfolios from Bank of America)
  • PNC: $4.1 billion; up 3% q/q
  • Fifth Third: $2.0 billion; up 3% q/q; up 17% y/y

The demise of bank branches?

In August 2009, Bank of America signaled that it would be reducing its branch network by up to 10%.  Some industry commentators took this to be indicative of the longer-term demise of the branch channel.  These analysts pointed to branch costs, as well as the increased usage of online banking and related services.  Most leading U.S. banks did reduce branch numbers in 3Q09.  However, many of these banks acquired other banks over the past year, and the reduction in branch numbers comes from the elimination of overlapping branches.

Going forward, banks may well continue to shave branch numbers in order to control costs and reduce branch density.  However, we do not envisage the demise of the branch channel.  What we are seeing is a re-evaluation of the role of the branch, given that online banking, online bill payment and mobile banks are not accounting for a growing share of day-to-day banking transactions.  In the future, branch activities will be more focused on complex interactions, such as lending, marketing of new products and services, the provision of financial advice and general relationship development.

The following are branch counts for leading banks in 3Q09 (with changes from 2Q09 in parentheses)

  • Wells Fargo: 6,653 (down 15)
  • Bank of America: 6,008 (down 101)
  • Chase: 5,126 (down 77)
  • PNC: 2,553 (down 53)
  • Regions (down 4)
  • BB&T: 1,859 (up 354, due to acquisition of Colonial Bank)
  • SunTrust: 1,690 (down 2)
  • Fifth Third: 1,306 (no change)
  • Citi Retail Banking North America: 1,051 (up 21)
  • KeyBank: 1,003 (up 10)
  • Huntington: 610 (no change)
  • Comerica: 444 (up 3)