A lower reduction in the allowance for loan losses compared with the same period last year helped to drive down the second-quarter profit for the Card Services and Auto (Card) unit at JPMorgan Chase & Co., the issuer reported July 13.

Net income for the quarter ended June 30 was down 7%, to $1.03 billion from $1.11 billion. Net revenue also dropped, by 4.8%, to $4.53 billion from $4.76 billion.

Chase lowered its total loan-loss reserves by $2.1 billion, mostly for the credit card and mortgage portfolios.

“The good news is that these reductions reflected meaningful improvements in delinquencies and estimated losses in these portfolios,” Jamie Dimon, chairman and CEO, said in the company’s earnings release. “We continue to maintain strong reserves.”

The provision for credit losses was $734 million, down 22.2% from $944 million a year earlier. The second-quarter provision reflected lower net charge-offs and a $751 million reduction in the allowance for loan losses due to lower estimated losses, Chase said. Last year’s second quarter provision included a $1 billion reduction in the allowance for loan losses.

The Credit Card net charge-off rate was 4.32%, down 149 basis points from 5.81% a year earlier and down 5 basis points from 4.37% in the first quarter. The 30-plus day delinquency rate was 2.13%, down 85 basis points from 2.98% a year earlier and down 42 basis points from 2.55% the previous quarter.

The net charge-off rate for the quarter would have been 4.03% absent a policy change on restructured loans that do not comply with their modified payment terms, Chase said in its earnings release. These loans now will charge-off when they are 120 days past due instead of 180 days.

The change resulted in a one-time acceleration of $91 million in second-quarter net charge-offs only and a permanent reduction in the 30-plus day delinquency rate, which was 0.1% for the second quarter, Chase said.

The one-time acceleration of net charge-offs is offset by a reduction in the allowance for loan losses, Chase said.

During the quarter, Credit Card loans were flat from a year earlier at $125.2 billion. Credit Card sales volume was $96 billion, up 12%. Some 1.6 million new credit card accounts were opened; open credit card accounts totaled 63.7 million as of June 30.

Card Services net revenue as a percentage of average loans was 11.91%, down 69 basis points from 12.6% a year earlier. Merchant processing volume was $160.2 billion, up 17%; total transactions processed were 7.1 billion, up 20%.

Branch sales of credit cards were down 19% from a year earlier but were up 11% from the previous quarter, Chase said.

The number of active mobile customers was 9.1 million, up 38% from a year earlier and up 6% from the first quarter; QuickDeposit active customers grew by more than 2.5 times from a year earlier, and QuickPay active customers tripled, Chase said.

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