Citing rising losses and lower charge volume and warning investors to expect further losses next year, JPMorgan Chase & Co.'s Card Services unit today posted a $700 million loss for the third quarter ended Sept. 30. It was the highest of four consecutive quarters of losses for the card unit. During the same quarter a year ago, the card unit posted net income of $292 million. The managed net charge-off rate on credit card receivables for the quarter was 10.3%, up 530 basis points from 5% during the same quarter a year ago. The delinquency rate for loans at least 30 days past due was 5.99%, up 208 basis points from 3.91%. Chase boosted its provision for credit losses during the quarter by 127.3%, to $5 billion from $2.2 billion during the same quarter a year ago. Average managed loans for the quarter were $169.2 billion, up 7.4% over $157.6 billion. Charge volume was $82.6 billion, down 12% from $93.9 billion. Excluding the effects of Chase's planned reduction in balance-transfer offers during the quarter, credit card sales volume dropped 6% from a year ago, Michael Cavanagh, Chase chief financial officer, today noted during a conference call with analysts. Chase customers opened 2.4 million accounts during the quarter, down 33.3% from 3.6 million a year ago. Chase's merchant-processing volume dropped 47.5%, to $103.5 billion from $197.1 billion a year ago, reflecting the divestiture last year of its Chase Paymentech Solutions joint venture. During today's analyst conference call, Chase Chairman and CEO Jamie Dimon noted the card industry is going through a "substantial adjustment," and "we know we will lose a lot of money next year on" the card business. Chase's card-unit losses could be "north of a billion dollars" during the first and second quarters of next year as charge-offs continue to rise, he said. Chase is restructuring its card products to handle industry changes, but "you won't see the results until 2011 or 2012," Dimon said. Chase reported companywide net income of $3.6 billion for the quarter, up 529.4% from $572 million a year ago. Revenue rose 81%, to $26.6 billion from $14.7 billion. Chase's investment-banking, asset-management, commercial-banking and retail-banking units drove the bank's strong overall results, according to the company.

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