JP Morgan Chase Sees Credit Card Chargeoffs Rise

JPMorgan Chase & Co. (NYSE: JPM) issued an earnings report today showing card services net income for the quarter of 2008 at $292 million and net revenue at $3.89 billion, up from Q2 figures of $250 million $3.78 billion respectively. But the massive bank also reported a sharp increase in credit card charge-offs and delinquencies.

The managed net charge-off rate for Chase’s Card Services unit was 5.0 percent in the third quarter, up from 3.64 percent in the prior year and 4.98 percent in the second quarter. The 30-day managed delinquency rate for credit cards was 3.69 percent in the third quarter, up from 3.25 percent in the prior year and 3.46 percent in the prior quarter.

Capital One also showed a similar trend, reporting Wednesday that its annualized charge off rate rose from 5.96 percent in August to 6.34 percent in September. Also, its 30-day delinquency rate rose from 4.07 percent in August to 4.2 percent in September.

Chase Card Services’ managed provision for credit losses was $2.2 billion, an increase of $866 million, or 64 percent, from the prior year, due to the higher level of charge-offs and an increase of $250 million in the allowance for loan losses.

Net income in the card unit was $292 million, down 63 percent from the prior year period.

Chase’s corporate-wide end-of-period managed loans were $159.3 billion, an increase of $10.3 billion, seven percent, from the prior year and $3.9 billion, or three percent from the prior quarter.

Overall, JPMorgan Chase’s net income for 3Q08 was $527 million, including estimated losses of $640 million for Washington Mutual merger-related items. JPMorgan Chase earned $3.4 billion in 3Q07.