Chase Crushes Q3 Earnings With Strong Card Spend And Mobile Growth

Banking giant JPMorgan reported results that bested Wall Street estimates on Thursday, buoyed in part by strong growth in its card business and mobile initiatives.

The headline numbers show that the company’s earnings came in at $1.76, which beat the $1.65 consensus. Revenues were $26.2 billion, while the Street had pegged $25.6 billion.

In the consumer and community banking segment, revenues were up 6 percent year on year to $12 billion. Trading in fixed income and currencies, along with commodities, was weighed down by a double-digit drop in fixed income trading. For the unit, the top line was $3.16 billion, down from the $3.18 billion expected.

Drilling down a bit, during the investor conference call, CFO Marianne Lake said that average core loan growth was up 7.5 percent year over year. Credit card sales and merchant volumes were up 13 percent. Total debit and credit card sales volume was up 11 percent year over year to $231.1 billion.

Card spend strength, said Lake, and the Sapphire card growth has been notable, bringing that segment up to $1.3 billion, up 3 percent.

“The credit environment continues to remain benign across products and portfolios. Card charge-offs were fully in line with our expectations and guidance, and outside cards our charge-off rates remain at historically low levels,” said Lake, who noted that reserves were at 3.3 percent in the latest period. Excluding special items, said Lake, the loss rate on auto lending was only 41 basis points. The executive said the auto market may have “plateaued at current levels with inventory, incentives, used car prices” stabilizing.

Digital banking customers were up 6 percent, and mobile customer counts were up 12 percent to a respective 46.3 million and 29.3 million. In response to an analyst question about technology’s impact on consumer deposits, Lake said that “we certainly feel that having a leading digital capability is critical to our overall customer franchise, and it will in all likelihood have an impact on stickiness of deposits, because customers value that kind of convenience very highly.”

Separately and in response to another question regarding the physical footprint of the more than 5,200 branches the company has in place, Lake said that “branches still matter,” as 75 percent of JPMorgan’s deposit growth came from customers at branches. “I know that all sounds like old news,” said Lake, “but it’s still new news or current news, so the branch distribution network matters.” Plans are in place to take the net branch count down by 125 branches this year, said the CFO.

Further discussing the technology roadmap for the company, CEO Jamie Dimon said in response to a question on online brokerages that the firm was “in beta platforms; we’re trading and investing in things like that, and also the P2P … is doing quite well.”

Further details will come during the company’s investor day presentation scheduled for February 2018.


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