October 14, 2009
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News: JPMorgan Chase Saddled With WaMu Defaults
JPMorgan Chase who sits at the top of the nation's financial industry along with Bank of America, CitiGroup, and Wells Fargo, released September's financials. Credit card defaults increased to 9.41 percent up from 8.97 percent in the second quarter and 5 percent from same time last year. The total card losses for third quarter were $700 million. JPMorgan Chase doesn't expect credit card default to decline within the next few months and forecasts defaults to peak at nearly 10.5 percent by end of second quarter 2010. The company based its forecast on rising unemployment which is expected to worsen. Despite the grim results for credit card defaults, JPMorgan realized a third quarter increase in stockholders earnings of 82 cents a share greatly surpassing analysts' predictions of 30 cents a share.
JPMorgan's credit card portfolios consists mostly of prime lenders, however, those of the recently Washington Mutual's (WaMu) card portfolio consists primarily of subprime accounts. The difference is reflected in the losses Chase realized with the WaMu accounts also increased to 9.41 percent up from 8.97 percent for second quarter and is expected to reach 25 percent by middle of 2010. Many of WaMu's credit card holders were outraged when JPMorgan Chase cancelled their accounts after its acquisition of WaMu. JPMorgan Chase responded to customer complaints by saying action was taken in response to current market conditions and new legislation.
Despite the poor showing in its credit card sector, JPMorgan Chase proudly posted a $3.6 billion profit for third quarter making stockholders optimistic about the future. Jamis Dimon, Chief Executive Officer for JPMorgan noted that the company's card division is not expected to show a profit until sometime next year. In the wake of continued rising unemployment number, the company predicts to lose nearly a billion dollars in card loan defaults during 2010. JPMorgan is one of the nation's largest lenders and is based out of New York City. The company is traded on the New York Stock Exchange (NYSE) under the symbol JPM.