Bank One forecasts it will fall seriously short of Wall Street's earnings expectations for the year because of problems in its credit-card unit. Instead of earning US$3.92 a share, as analysts expected, the Chicago banking giant forecast operating earnings per share this year of $3.60 to $3.65. It is a crucial year for the bank as it tries to prove it can pull off last year's merger with First Chicago NBD. Analysts have said all along that it was particularly important for the company to meet earnings expectations of $2.11 in the second half, a figure the company will miss by 27 to 32 cents. The second half was 'very important to our credibility, so we've hurt our credibility', John McCoy, Bank One's chief executive, said. Although Mr McCoy said the shortfall came entirely from problems at First USA, the bank's large credit-card unit, and not from trouble with the merger, analysts see it as a black mark on the company. 'It does cloud management's credibility and their ability to deliver on what they've promised,' said Michael Ancell, an analyst with Edward Jones. 'But that's been a question about Bank One for some time, and I guess it's not going to go away anytime soon.' Bank One, formerly Banc One Corp of Columbus, Ohio, was the national star of the banking industry for years before it stumbled on bad derivatives investments in 1994, then underwent a necessary but expensive restructuring. The company's stock had begun to perform well again when Bank One announced its merger with First Chicago last year. The marriage has been closely scrutinised because of past problems at both banks. Wall Street was pleased with Bank One's performance in the first half, when it met operating earnings expectations, although analysts consistently cautioned that the second half would tell the real story about the company's performance and future. The problems in the second half are coming not from the merger but from what has been a prized business for Bank One since it was acquired in 1997. First USA is considered one of the best credit-card companies in the industry and has performed well throughout its history. It has been a key area of growth for Bank One, and the last place many investors would look for trouble. The unit recently led the launch of Bank One's stand-alone Internet bank, WingspanBank. com, and Dick Vague, who heads First USA, was put in charge of consumer lending for the bank in March. 'It was one of their main drivers for growth,' Mr Ancell said. 'I don't think they're ever going to get the business back to what it was a couple years ago.' First USA ran into trouble with its profit margins beginning in July. Mr McCoy said: 'When we saw that, we said do we have a problem or is this a blip? And we've done a lot of analysis, and we think we have a problem, not a blip.' Mr McCoy said he had confidence in First USA's ability to right itself. 'We've asked a lot of them, and there have been some execution issues here,' he said. Katrina Blecher, a bank analyst at Brown Brothers Harriman, said First USA's earnings shortfall did not indicate the credit-card industry was headed for trouble. 'They were aggressively marketing and got caught with high attrition levels,' Ms Blecher said. Reacting to heavy competition, First USA apparently was pricing its introductory-offer programmes too low and was losing established card holders. Customer service also was a problem, bank officials said. For example, payments were not being processed quickly enough, which meant some customers were charged late fees even though their payments were on time. The long-term impact on Bank One is hard to predict. Analysts have said in the past that if the company did not perform well in the second half, it might become an acquisition target, even though it is the fifth-largest bank in the country.