JP Morgan Chase Sees Credit Card Chargeoffs Rise
Banking giant JPMorgan Chase reported a large decline in earnings for the third quarter, mostly on mortgage losses. But the credit card unit also reported a significant increase in chargoffs and delinquencies.
JPMorgan Chase & Co. (NYSE: JPM) issued an earnings report today showing card services net income for the quarter of 2008 at $292 million and net revenue at $3.89 billion, up from Q2 figures of $250 million $3.78 billion respectively. But the massive bank also reported a sharp increase in credit card charge-offs and delinquencies.
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The managed net charge-off rate for Chase’s Card Services unit was 5.0 percent in the third quarter, up from 3.64 percent in the prior year and 4.98 percent in the second quarter. The 30-day managed delinquency rate for credit cards was 3.69 percent in the third quarter, up from 3.25 percent in the prior year and 3.46 percent in the prior quarter.
Capital One also showed a similar trend, reporting Wednesday that its annualized charge off rate rose from 5.96 percent in August to 6.34 percent in September. Also, its 30-day delinquency rate rose from 4.07 percent in August to 4.2 percent in September.
Chase Card Services’ managed provision for credit losses was $2.2 billion, an increase of $866 million, or 64 percent, from the prior year, due to the higher level of charge-offs and an increase of $250 million in the allowance for loan losses.
Net income in the card unit was $292 million, down 63 percent from the prior year period.
Chase’s corporate-wide end-of-period managed loans were $159.3 billion, an increase of $10.3 billion, seven percent, from the prior year and $3.9 billion, or three percent from the prior quarter.
Overall, JPMorgan Chase’s net income for 3Q08 was $527 million, including estimated losses of $640 million for Washington Mutual merger-related items. JPMorgan Chase earned $3.4 billion in 3Q07.
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Comments
Comment from Anthony in Portland, Oregon on December 8, 2008 at 1:59AM EST
I am a skilled laborer. Its difficult for me to see JPM receive 25 billion dollars while they are partly responsible for the economic recession which has lead to my business's downfall. With a great lessening of my income, I am no longer able to meet my minimum payments to Chase, WAMU (bought by JPM Chase) & Discover. JPM & the others want their money from me. I owe the money. But isn't it hypocritical to say I owe them the money when they just received 25 billion in income? Why do I have to pay JPM when they didn't have to pay their bills?! Anthony, Portland, OR
Comment from Ken on February 11, 2009 at 7:43PM EST
Banks didn't receive 25B in income. Its a L-O-A-N. Kinda like YOU took out a L-O-A-N from the bank; you just weren't able to stay with the terms.....which you probably never deserved. THAT's not just your fault; the bank is partially to blame for setting you up.
Comment from Charles on February 12, 2009 at 5:09PM EST
Ken is right. This TARP money is basically a loan. The banks issued preferred stock and the government owns those shares and receives dividends at rates of 5-10%. The government has already been paid several hundred million dollars in dividends from these banks. Chase has paid well over $100 million in dividends so far and they were asked to take the money from the government. Chase has fulfilled its obligation with payments, now it's time for Anthony to pay his bills.
Comment from BARB on February 14, 2009 at 10:55AM EST
CHASE CREDIT CARD DIVISION IS CONDUCTING THEIR OWN TYPE OF EXTORTION. THEY HAVE INCREASED MIN. PAYMENTS FOR CUSTOMERS WHO HAVE LOW PROMOTIONAL RATES, ALMOST TRIPLING THE PAYMENT. THIS WILL DRIVE EVEN MORE PEOPLE TO DEFAULT OR FILE BANKRUPTCY. PERHAPS TIM GEITHNER NEEDS TO LOOK AT THIS SITUATION.