Global financial services firm JPMorgan Chase
has reported first half net profits for its card division of $40
million, compared to a net loss of $1.21 billion at the same point
last year.
Net income in the first half was $343 million
compared to a $672 million loss in the corresponding period last
year.
According to Chase, the improved results were
driven by a lower provision for credit losses, partially offset by
lower net revenue.
First half card division highlights
included:
- Return on equity was 9 percent on $15 billion of average
allocated capital. - Pretax income to average loans (ROO) was 1.54 percent, compared
with negative 2.46 percent in the prior year and negative 1.22
percent in the prior quarter. - Net interest income as a percentage of average loans was 9.2
percent, down from 9.93 percent in the prior year and 9.6 percent
in the prior quarter. - Sales volume was $78.1 billion which increased by 6
percent - Merchant processing volume was $117.1 billion on five billion
total transactions processed.
Figures also showed that second quarter cards’
net interest income of $3.4 billion fell by 22 percent as a result
of legislative changes and a decreased level of fees.
2.7 million new accounts have been opened in
this year to date, but credit card sales were down eight percent
from a year ago.
“Although we are gratified to see
consumer-lending net charge-offs and delinquencies decline, they
remain at extremely high levels and therefore returns in our
consumer-lending businesses are still unacceptable,” said JPMorgan
Chase chairman and CEO Jamie Dimon.
“As a result, these businesses did not meet
expectations nor generate satisfactory returns on capital for our
shareholders. It is too early to say how much improvement we will
see from here.
“We saw solid performance in our other
businesses. In particular, our wholesale businesses experienced
reduced net charge-offs that led to reductions in loan loss
reserves, and are currently seeing credit costs which reflect the
increasingly healthy condition of our wholesale clients.”
