Helped by improving economic trends, JPMorgan Chase & Co.’s Card Services unit on April 13 reported a healthy increase in credit card sales volume for the first quarter ended March 31.
Profits for the unit, however, rose a scant 3% because of reduced revenues (
Chase’s consumer credit card sales volume during the quarter rose 11.7%, to $77.5 billion from $69.4 billion a year earlier. Consumers opened 2.5 new accounts during the quarter, up 4.2% from 2.4 million. Chase reported 91.9 million open accounts at the end of the quarter, up 3.4% from 88.9 million at the end of March 2009.
The net charge-off rate during the quarter was 6.97%, down 478 basis points from 11.75% a year earlier. The delinquency rate for cards at least 30 days past due was 3.57%, down 205 basis points from 5.62%, while the delinquency rate for accounts at least 90 days past due was 1.93%, down 122 basis points from 3.15%.
In its merchant-acquiring business, Chase reported bankcard sales volume of $125.7 billion, up 16.4% from $108 billion, while total acquired transactions reached 5.6 billion, up 19.1% from 4.7 billion.
During a conference call with analysts to discuss the quarter’s earnings, Douglas L. Braunstein, Chase chief financial officer, cited a $23 billion reduction in card outstandings from a year earlier for the card unit’s lower revenues. Braunstein also said Chase’s noteworthy increase in card sales volume suggests the issuer is outpacing average industry growth, which in turn has boosted Chase’s relative market share of credit cards within the last year. He did not specify Chase’s actual gains versus its competitors’.
The uptick in sales volume also reflects positive economic trends “for consumers in general,” Braunstein said.
Looking ahead, Braunstein said he expects the average charge-off rate for Chase’s credit card unit to fall to 5.5% during the second quarter as losses continue to abate.
Conspicuously absent from the conference call was any mention of the performance of Chase’s large debit card operation or the increasingly contentious atmosphere surrounding CEO Jamie Dimon, the Federal Reserve Board’s proposed new rules for debit card interchange and Sen. Dick Durbin, D-Ill., who crafted the amendment within the Dodd-Frank Act requiring the rule-change.
Dimon has publicly criticized the amendment, which analysts say would cut debit interchange revenue by as much as 70%, telling a group of institutional investors on April 5 that the law “was passed in the middle of the night” with no facts and no analysis. Chase recently said it plans to end its debit rewards program if the Fed rules go into effect in July as proposed because the proposed change “significantly impacts debit cards.” (
Durbin on April 12 blasted Dimon in a five-page letter in which he told the Chase CEO “the wisdom of (interchange) reform is confirmed by the irrationality of the arguments that your industry raises against it,” calling Dimon’s arguments “misrepresentations and threats.” (
Noting Chase’s $17.4 billion in profits in 2010 and Dimon’s compensation last year of $20.8 million, Durbin stated that his amendment “simply tries to spare consumers from bearing the cost of interchange fees that are anticompetitive and unreasonably high.”
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