JPMorgan Chase’s net income from retail financial services*
slumped by 60% year-on-year to $374m in the six months to the end
of June.
The slump in net income from retail financial services was the
result of the ailing mortgage, auto and other consumer lending
sub-division, which threw a shadow on the otherwise well-performing
retail banking unit.
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Excluding the mortgage, auto and other
consumer lending sub-division, the bank actually generated a
10% increase in half year net income to $2bn from retail banking
alone.
Provisions for credit losses from retail
banking fell by 55% to $161m.
Retail banking loans at the end of June
amounted to $17.1bn, 3% higher than a year ago; while both current
and savings accounts rose by 10% year-on-year to $136.3bn and
$178.1bn respectively.
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By GlobalDataOther retail banking metrics for the year-on-year half
year period include:
- Branch numbers rose by 4% to 5,340;
- ATMs network increased by 5% to 16,443 units;
- The bank invested in more sales specialists, resulting in a 12%
increase to 7,630 personnel; - Active online customer numbers rose by 9% to 18m;
- But checking account numbers stalled at 26m;
- In the cards division, provisions for credit losses declined by
82% to $1.03bn and net income soared to $2.3bn (H110: $40m).
Ailing mortgage business drags retail
services profits down
The struggling mortgage, auto and other
consumer lending sub-division posted a net loss of $1.4bn for the
first six months of the year, compared with a $621m profit a year
ago.
Revenues at the mortgage, auto and consumer
lending division fell by a third to $2.9bn.
A 60% year-on-year slump in mortgage fees and
related income for the six months to the end of June ($611) and a
net loss of $192m from net mortgage servicing revenue (H110:
$1.5bn) dragged overall net income from retail financial services
down.
Retail financial services net income
down 60% YOY
As a result, net income from retail financial
services crashed to $374m – representing a 60% decline from the
corresponding period a year ago.
Total loans in the retail financial services
division declined by 8% year-on-year to $324.8bn; deposits rose by
5% to $376.3bn.
On a positive note, provisions for credit
losses were 55% less than a year-ago and amounted to $2.5bn
At group level, net income for the six months
to end-June was up 35% over a year ago to $11bn.
Total assets increased by 12% to $2.24tr.
Deposits soared by almost a fifth from a year
ago (18%) to $1.05tr.
Unlike many of its peers, JPMorgan Chase
increased its total headcount number to 250,095.
“Working on fixing problems & mistakes”
Chairman and CEO Jamie Dimon, said the bank
was “working hard to fix our problems and address past mistakes”.
He added that he expects credit losses to remain high.
“We have already incurred significant costs,
charged-off substantial amounts and established significant
reserves for mortgage-related issues. Unfortunately, it will take
some time to resolve these issues and it is possible we will incur
additional costs along the way. However, in time, these costs will
normalise as well,” he said.
*The retail financial services division is made up of
mortgage, auto and other consumer lending and retail
banking.
