CreditCards.com

Living with credit, Research, regulation, industry reports

J.P. Morgan Chase, Wells Fargo earnings slip

Jeremy Simon

In the latest earnings announcements from major U.S. credit card issuers, both J.P. Morgan Chase and Wells Fargo said their net income declined in the fourth quarter, even as both banks appeared to avoid the full impact of the subprime meltdown.

At J.P. Morgan’s Chase banking division, earnings increased despite more than quadrupling reserves for credit losses to $1.05 billion.

Within the regional banking division, branch sales of credit cards rose 34 percent from the year before.

“For the nation’s banks, the subprime-mortgage crisis that began this summer was just the start of trouble that has bled over into the consumer sector, affecting credit card spending and corporate debt as the U.S. economy has taken a turn for the worse,” The Wall Street Journal said. Still, “J.P. Morgan seems to have weathered most of the havoc in the banking sector.”

That sentiment was supported by comments from the bank’s CEO, with Chairman and Chief Executive Jamie Dimon noting in the earnings release that “the diversified nature of our company helped offset areas of weakness.”

Meanwhile, Wells Fargo’s net income included the addition of $1.4 billion pre-tax credit reserve, as revenue climbed to a record level.

“Credit card charge-offs increased $47 million in the quarter, about one-third of which was due to growth,” said Chief Credit Officer Mike Loughlin. “After having been at uncharacteristically low levels, card charge-off rates increased to 5 percent in the fourth quarter and were largely in line with industry standards, reflecting some stress on the consumer.”

Even banks that avoided the full force of the credit woes will still need to remain vigilant. As J.P. Morgan’s Dimon said, “We remain extremely cautious as we enter 2008.”

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, we ask that you do not disclose confidential or personal information such as your bank account numbers, social security numbers, etc. Keep in mind that anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

  • Credit Balance

    On 11-23-07 I by mistake made a payment of $11,857.29 instead of my credit card *********** balance of $1857.29.
    It is 12-10-2007, 10:43 AM CST yet to receive the over payment.
    11-25-07 at 8:17PM CST Ms. Erin took my 1st call and promised to get this issue resolved by sending me the credit balance right back in 2 to 3 days.
    To date I have not received my money back. I have made numerous calls to Chase customer service 800-436-7927 and why my money has not been returned back?