Barclaycard’s Expansion Plan

Barclays is looking into expanding its share in markets, including the U.S. and Germany, with new money freed up through its exit from the African business.

The British multinational banking corporation is looking into using its credit card business to spearhead its growth as it has quadrupled the bank’s profit over the last decade. Today, Barclaycard contributes a fourth of the bank’s overall profit and generates the highest returns, thereby helping the bank keep its head over the water.

Barclays’ credit card chief, Amer Sajed, said the new expansion plans have the backing of Barclays CEO Jes Staley. “I am waiting for more capital to come through, yes,” Sajed told Bloomberg. “We have opportunities to grow in pretty much every market we are in.”

“Because we’ve been so constrained with capital, we haven’t been able to maximize the efficiency of our balance sheet,” said Staley in a Bloomberg Television interview with Francine Lacqua. “We do have opportunities to deploy the capital, whether it’s in our card business or in corporate lending.”

The fresh capital would be used to rebalance Barclaycard’s revenue, which sees credit card interests as its biggest source of income, instead of interchange fees that banks charge merchants for consumer transactions. It will also provide for investing in new technology and marketing efforts to attract customers.

The credit card division is also spiffing up its rewards program to improve upon usage as Europe gears to put a cap on interchange fees, which will force various players to curtail their list of credit card rewards.

Referring to Banco Santander and American Express, Sajed said: “The reduction in interchange fees is going to cause a market reset, because many of our competitors had richer rewards programs that they will no longer be able to afford.”

As for its current position in the European market, Barclaycard remains among the most profitable businesses at a major European bank. Other than UBS Group AG’s wealth management business, Barclaycard was the only other player to have earned over $2 billion in pre-tax profit and made a pre-tax return on equity of more than 25 percent last year, according to Bloomberg.