JPMorgan Says Consumers Are Resilient, Flags Tricolor Impact on Credit Losses

JPMorgan kicked off earnings season Tuesday (Oct .14) with third-quarter results that pointed to robust spending patterns from clients, some headwinds to savings, and a measurable impact from the bankruptcy of subprime auto lender Tricolor Holdings.

Company earnings materials revealed that debit and card sales volumes were up 9% year over year. The card net charge-off rate was 3.2% in the quarter, down from 3.4% in the second quarter and 3.2% a year ago.

Chief Financial Officer Jeremy Barnum said on a call with analysts that credit costs during the quarter were $3.4 billion, with net charge-offs of $2.6 billion, in tandem with net charge-off reserves of $810 million.

The charge-offs were “slightly elevated as a result of a couple of instances of apparent fraud in certain secured lending facilities,” he said. “Otherwise, in both wholesale and consumer, credit performance remains in line with our expectations.”

As for the larger macro picture, Barnum said that “consumers and small businesses remain resilient based on our data. While we are closely watching the potentially softening labor market, our credit metrics, including early-stage delinquencies, remain stable and slightly better than expected.”

Although the deposit activity was flat in the quarter, the bank retained its leading share in deposits, he said.

Shares of JPMorgan were 1.5% lower in intraday trading Tuesday.

Looking to Long-Term Deposit Growth

Looking ahead, the company expects the 2025 card net charge-off rates to be approximately 3.3% on favorable delinquency trends driven by the continued resilience of the consumer. The company had previously guided deposit growth to be on the order of 3% to 6%, as defined for 2026.

“[T]he personal savings rate is a little bit lower than expected,” Barnum said during the call. “Consumer spending remained robust while income was a bit lower. So that’s all else equal, decreasing balances per account … At the margin, that kind of upward inflection point has been pushed out a little bit. At a high level, we remain quite confident about the overall long-term trajectory.”

Later in the call, analysts asked about the syndicated loan and private credit markets. Barnum and CEO Jamie Dimon said the Tricolor collapse contributed $170 million in charge-offs during the quarter. Beyond that, deal flow has been healthy, and wholesale charge-off rates have been low. The trend toward normalization would increase some of the wholesale charge-off rates.

Dimon said the collapse of Tricolor was not the company’s “finest moment” and warned that “when you see one cockroach, there are probably more.”

“We make mistakes too,” he said during the call. “…There clearly was, in my opinion, fraud involved in a bunch of these things, but that doesn’t mean we can’t improve our procedures.”

Barnum said that exposure to non-depository financial institutions (NDFIs) has been manageable, and there is no exposure to global automotive parts manufacturer First Brands.

He said that “the vast majority of [NDFI] lending that we do is highly secured or in some way structured or securitized. In other words, it’s not like we’re doing extremely high-risk, low-rated lending to the NDFI community.”

Artificial intelligence garnered some discussion as a cost-saving tool.

“A lot of people are spending a lot of time on it,” Barnum said. “We’re spending a lot of money on it. We have very deep experts… we’ve been doing it for a long time, well before the current generative AI boom. But in the end, the proof is going to be in the pudding in terms of actually slowing the growth of expenses.”