Citing modest improvements in its recession-battered card portfolio, JPMorgan Chase & Co. this week reported a $303 million loss within its Card Services unit for the first quarter ended March 31; it reported a $547 million net loss during the same period last year.
Managed net revenue for the unit was $4.4 billion, down 14.2% from $5.13 billion. Net interest income was $3.69 billion, down 17.6% from $4.48 billion, a drop caused by lower average managed loan balances, the impact of legislative changes and decreased fees, Chase said. Credit card sales volume totaled $69.4 billion, up 4.2% from $66.6 billion.
Chase managed $149.3 billion in loans at the end of March, down 15.2% from $176.13 billion a year earlier. The managed provision for credit losses was $3.5 billion, down 25.5% from $4.7 billion, which included a reduction of $1 billion for loan losses, partially offset by higher levels of charged-off accounts.
The net charge-off rate during the quarter was 10.54%, up 368 basis points from 6.86% a year earlier. The delinquency rate for loans at least 30 days past due was 4.99%, down 35 basis points from 5.34% a year ago.
Merchant-processing volume during the quarter was $108 billion, up 14.4% from $94.4 billion a year earlier. Chase processed 4.7 billion total transactions, up 14.6% from 4.1 billion.
Noninterest expense was $1.4 billion, up 3.7% from $1.35 billion caused by higher marketing expenses.
Chase said it opened 2.5 million credit card accounts during the quarter, up 13.6% from 2.2 million during the same quarter a year ago. Chase had 88.9 million open credit card accounts at the end of March, down 15.9% from 105.7 million accounts a year earlier.
During a conference call yesterday with analysts, Chase CEO Jamie Dimon said that over the past two years Chase has closed some 20% of underperforming credit card accounts in its portfolio, and getting rid of “a lot of the bad stuff” has improved the card portfolio’s overall performance.
Mike Cavenagh, Chase chief financial officer, said during the call that he expects Chase’s charge-off rate to improve soon, falling to about 9.5% during the next quarter.
