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Do not expect a profit from JPMorgan Chase & Co.'s Card Services unit this year, Jamie Dimon, Chase CEO, says in a 29-page letter to shareholders released yesterday. "We do not expect 2009 to be a good year for the credit card business," he wrote. "In fact, we do not expect to make any money in Card Services this year." The unit earned $780 million in net income last year, down 73% from $2.9 billion in 2007. Chase expects charge-offs to keep pace with the rate of unemployment, increasing from 5% of receivables for fiscal year 2008 to reach 9% during 2009, according to Dimon. The issuer has prepared for higher losses by "intensifying" collections and by boosting provisions for losses to $8 billion from $3 billion, he wrote. Chase enrolled 600,000 struggling cardholders in flexible payment programs in 2008 and expects to expand the program further this year, Dimon wrote. Chase became the largest credit card issuer in the United States when it took over Washington Mutual last year, thereby adding more than 168 million cards and more than $190 billion in managed loans. Chase is well-positioned for growth once the crisis is over, according to Dimon. "We believe that our ongoing investments in service quality, rewards programs and enhanced infrastructure will ultimately make us one of the best credit card companies in America," he wrote.
