JPMorgan Chase & Co.’s consumer credit card unit reported net income of $849 million for the quarter ended Sept. 30, down 8.3% from $926 million a year earlier, as fewer consumers opened new accounts and the percentage of consumers revolving a balance declined.
The unit results, for the first time, included auto and student lending, the company said.
Net revenue for the period was $4.78 billion, down 6.3% from $5.1 billion, driven by lower average loan balances and lower fees. Marketing and other expenses rose 21.9% to $1.56 billion from $1.28 billion a year earlier. Chase held $136.4 billion in loans at the end of the quarter, down 6.8% from $127.1 billion last year.
As credit trends improved, Chase’s allowance for credit card losses declined to $7.5 billion, down 42.3% from $13 billion, reflecting fewer account-defaults compared with a year earlier. The net charge-off rate for credit cards for the quarter was 4.70%, down 417 basis points from 8.87% a year earlier. The delinquency rate for credit card accounts at least 30 days past due was 2.9%, down 167 basis points from 4.57%.
Credit card purchase volume for the period, excluding commercial cards, was $87.3 billion, up 9.7% compared with $79.6 billion a year earlier. Chase opened 2 million new credit card accounts during the quarter, down 26% from 2.7 million a year earlier. Open accounts at the end of the quarter totaled 64.3 million, down 27.8% from 89 million.
Merchant processing volume during the quarter was $138.1 billion, up 18% from $117 billion a year earlier. Chase processed 6.1 billion total transactions, up 17.3% from 5.2 million the prior year.
In a conference call with analysts on Oct. 13 following the earnings announcement, Chase CEO Jamie Dimon said the surge in marketing expenses during the quarter was unusual.
“Marketing is ... an investment,” Dimon said, adding that there is “a lot of analysis” involved. “Don’t think of all that as direct mail. That is online marketing...partners...So it really is a wide variety of stuff, and it is obviously a lumpy number. If you look at it year over year it will probably go up 10%, not like you have seen...this quarter.”
