J.P. Morgan Chase’s fourth-quarter earnings results showed continued momentum in consumer spending, with increased credit and debit card use.
Consumers also drew down their deposit account balances.
“The U.S. economy has been resilient,” J.P. Morgan Chase CEO Jamie Dimon said in a Wednesday (Jan. 15) press release. “Unemployment remains relatively low, and consumer spending stayed healthy, including during the holiday season.”
However, he cautioned that risks remain.
“Ongoing and future spending requirements will likely be inflationary, and therefore, inflation may persist for some time,” he said in the release.
The company’s earnings supplementals revealed that within the consumer/community banking segment, credit and debit card sales volume was up 8% year on year to $477.6 billion. Drilling down a bit, the card services sales volume surged to $335.1 billion, compared to $307.2 billion last year. The card services net charge-off rate was 3.3%, compared to 2.8% in the fourth quarter of last year.
Deposits in the latest quarter within the segment were just over $1 trillion, down 4% year on year.
As for mobile banking, the growth trend that has been marked over several quarters remained intact, as active mobile customers were up 7% to 57.8 million in the latest quarter, measured from 2023’s fourth-quarter levels.
Looking ahead in the current year, management said on a conference call with analysts that the company expects to see growth in revolving loans tied to cards and “modestly higher” deposit balances. The net charge-off rate on the cards business is expected to come in at about 3.6%, per company materials. Chief Financial Officer Jeremy Barnum said during the call that, through the past year, J.P. Morgan added about 10 million new card accounts.
Although deposits were down year on year, Barnum said on the call that “consumer balances have stabilized” and there has been growth, already, in consumer checking deposits.
Card loan growth will be “healthy” but below the “12% pace we saw in 2024, as tailwinds from revolving ‘normalization’ are largely behind us,” he said.
Later in the call, Barnum said that “when we look at the encouraging growth that we see in our checking franchise,” previously “there was some yield-seeking behavior. And so, you did see people moving money out of checking into higher-yielding alternatives over the course of the last couple of years in the rate cycle. It feels to us as if we’re in the final innings of that. We’re just not seeing nearly as much yield-seeking pressure as we had seen.”
Shares were up roughly 1% in intraday trading Wednesday.
Asked during the call about the regulatory environment, Barnum said, “All we want is a coherent, rational, holistically assessed regulatory framework that allows banks to do their job supporting the economy that isn’t reflexively anti-bank … that doesn’t default to the answer to every question being ‘more of everything’ — more capital, more liquidity. It uses data, and it balances the obvious goal that we all share … recognizing that [banks] play a critical role in supporting growth.”
Management also said during the call that there has been improvement in business sentiment, and balance sheets at small businesses are healthy.
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