This story was updated from its original version with more information.
A higher provision for credit losses driven by a lower reduction in the allowance for loan losses from a year earlier caused a drop in first-quarter profit for the Card Services and Auto unit of JPMorgan Chase & Co., the issuer announced April 13.
The unit report net income of $1.12 billion for the period ended March 31, down 25.3% from $1.5 billion during the same period last year. Revenues were down 2.1%, to $4.7 billion from $4.8 billion, caused by lower average card balance and narrower loan spreads, partially offset by lower revenue reversals associated with lower net charge-offs, Chase said in its earnings release.
The provision for credit losses rose 109%, to $738 million from $353 million. Noninterest expense was up 5.7%, to $2.03 billion from $1.92 billion.
Credit card average loans for the quarter were $127.6 billion, down $4.9 billion or 4% from a year earlier. Credit card sales volume was up 12%, to $86.9 billion; excluding the impact of the Kohl's card portfolio, sales volume was up 15%, Chase said. Capital One Financial Corp. acquired the 20 million Kohl's card accounts in August 2010 (see story).
Some 1.7 million new credit card accounts opened during the quarter from a year earlier, according to Chase.
Merchant-processing volume was up 22%, to $152.8 billion; total transactions processed were 6.8 billion, up 21%, Chase said.
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