JPMorgan Chase & Co.'s Card Services unit today reported a second quarter net loss of $672 million, marking its highest of three consecutive quarters of losses. During the same quarter a year ago, the unit reported $250 million in net income. Chase charged off $4.35 billion in net managed receivables during the second quarter ended June 30, up 130% from $1.89 billion during the same period last year. The issuer's net charge-off rate was 10.03% of managed receivables during the quarter, up 505 basis points from 4.98% a year earlier. Excluding cards in the Washington Mutual Inc. portfolio Chase took over last year, Chase's net charge-off rate was 8.97%, up 399 basis points from 4.98%. The net charge-off rate on WaMu cards was 19.17% during the quarter, up 708 basis points from 12.09% for the fourth quarter of 2008, when Chase took over WaMu. During a conference call with analysts this morning, Mike Cavanagh, Chase chief financial officer, called the second-quarter charge-off rate "obviously very high" but about what the issuer had expected. Chase projects charge-offs excluding WaMu cards will approach 10% during the next quarter. "Beyond that, it's going to be a function of where the economy and unemployment goes," Cavanagh said. Charged off loans from the former WaMu's card base could represent a whopping 24% of Chase's managed receivables by the end this year, according to the issuer's projections. Chase's provision for credit losses during the second quarter was $4.6 billion, double the $2.2 billion it set aside for losses a year ago. Chase managed $174.1 billion in average managed card loans during the quarter, up 13.9% from $152.8 billion a year ago. It had 151.9 million credit cards on issue as of the end of the quarter, down 3.6% from 157.6 million a year ago. Charge volume during the quarter was $82.8 billion, down 11.5% from $93.6 billion a year earlier. Chase's merchant-acquiring business logged 4.5 billion bankcard transactions during the quarter, down 19.6% from 5.6 billion. Chase acquired $101.4 billion worth of bankcard volume, down 49.1% from $199.3 billion. Companywide, the news was much better, as Chase reported net income of $2.72 billion, up 36% from $2 billion during the same period a year ago.

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