IMGCAP(1)]
JPMorgan Chase & Co. this morning reported a 63% drop in third-quarter net income for its card-services unit, to $292 million from $786 million during the same period ended Sept. 30 last year. The bank had 156.9 million credit cards in circulation at the end of the quarter, up 2% from 153.6 million a year earlier. Chase managed $159.3 billion in credit card loans at the end of the quarter, up 7% from $149.1 billion. Chase charged off a $1.98 billion in managed card loans during the quarter, up 46% from $1.36 billion during the same period last year. That amounts to 5% of managed receivables in the third quarter, up 136 basis points from 3.64% the same time last year. Chase boosted its provision for credit card losses to $2.23 billion, up 64% from $1.36 billion. Chase also expects to report a 5% net charge-off rate during the fourth quarter, Michael Cavanagh, Chase chief financial officer, told investors during a conference call this morning. Charge-offs could increase to around 6% of receivables in the first part of 2009 and rise to about 7% at the end of next year, Cavanagh said, adding his estimates are "highly dependent upon the economy." Charge volume during the quarter was $93.9 billion, up 5% from $89.8 billion in the third quarter last year. Chase's merchant-acquiring business reported bankcard volume of $197.1 billion, up 9% from $181.4 billion. The unit logged 5.7 billion bankcard transactions during the quarter, up 14% from 5 billion a year earlier. Companywide, Chase reported third-quarter net income of $527 million, down 85% from $3.4 billion during the same period in 2007. Chase logged an estimated $640 million after-tax expense for its Sept. 25 acquisition of Washington Mutual Inc.
