Loss Provision Rise Sends WaMu Card Profits Down

Washington Mutual (NYSE: WM) released second quarter results this week, reporting net income of $830 million, up from $767 million in the same period a year ago.

WaMu’s Card Services group reported net income of $141 million, down from $181 million in the second quarter of 2006. The decline was due to a rise in the provision for loan losses from $417 million a year ago to $523 million in 2007’s second quarter. WaMu also said a decrease in its card portfolio securitization in the quarter led to lower net income. Period-end managed receivables were $24.9 billion, up about 18 percent from $21.1 billion. The rise in receivables was partly due to the opening of 928,000 new accounts in the quarter, WaMu reported.

The 30-day delinquency rate was 5.11 percent, compared with 5.23 percent last year. Managed net credit losses, or charge offs, came in at a 6.49 percent rate, up from 5.99 percent. WaMu attributed the rise to an increase in contractual and bankruptcy losses.

The Home Loan division reported a loss of $37 million as the tough mortgage market hurt lenders. Loan volume tallied $31.5 billion, down from $41.7 billion in the second quarter of 2006.