Chase Reports Higher Income, Revenues and Provision for Losses

JPMorgan Chase today reported third quarter net income of $3.4 billion, up from $3.3 billion a year ago. Net managed revenues were $17 billion, up 4 percent from the third quarter of 2006.

Like its major bank competitors, Chase increased its provision for credit losses, raising it to $2.4 billion in the third quarter, up $944 million, or 67 percent from a year ago. Chase reported that its “(c)onsumer managed net charge-offs were $1.7 billion, compared with $1.4 billion, resulting in managed net charge-off rates of 1.96% and 1.69%, respectively.” Chase attributed the increase to losses from home equity loans and higher net charge offs.

The Card Services division reported net income of $786 million, up 11 percent from $711 million a year ago. Net revenues were more than $3.8 billion, up 6 percent from $3.6 billion. Managed receivables at the end of the quarter were $149.1 billion, up 4 percent from a year ago.

Card Services’ managed provision for credit losses was $1.4 billion, up 7 percent from a year ago, due to higher charge offs. The managed net charge off rate was 3.64 percent, up from 3.58 percent. The 30-day delinquency rate was 3.25 percent, up from 3.17 percent. Charge volume increased about 3 percent to $89.8 billion. Merchant processing volume rose 8 percent to $181.4 billion.

The Retail Financial Services unit reported net income of $639 million, down 14 percent from $746 million.

Retail Financial increased its provision for credit losses to $680 million, an rise of nearly 600 percent from $114 million. The provision in the quarter includes $306 million in the allowance for loan losses related to home equity loans. Home equity net charge offs rose to $150 million from $29 million a year ago. Write offs on the subprime mortgage portfolio totaled $40 million, up from $13 million.

The Auto Finance group under Retail Financial reported net income of $76 million, down 11 percent. The provision for loan losses was increased 57 percent to $96 million. The net charge off ratio rose to 0.97 percent from 0.64 percent.  

JPMorgan Chase reports assets of $1.5 trillion and operations in more than 50 countries.