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September 26, 2020
Business International

Credit card losses set to climb industrywide: JPMorgan’s Smith

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Image: Computer chips are seen on newly-issued credit cards in this photo illustration taken in Encinitas, California September 28, 2015. REUTERS/Mike Blake

By Dan Freed

(Reuters) – U.S. credit card losses are likely to rise at JPMorgan Chase & Co and across the industry,  Gordon Smith, head of the bank’s consumer businesses, said at a conference on Tuesday.

Smith said the largest U.S. bank is being “surgical” in determining where to tighten credit standards but he added that lenders industry wide ought to be leaning toward stricter credit card lending standards rather than looser ones.

JPMorgan’s earnings have shown rising sales volumes as well as weakening credit trends in its credit card business, consistent with other lenders. A recent investor presentation by the bank said Chase Card has only modest exposure to credit card borrowers with FICO scores lower than 660.

A Fitch Ratings report last month said credit card loss rates, which have already been climbing, are likely to rise for several more quarters as loan growth has increased, driven partly by lower credit standards.

Smith said Tuesday rising losses should be no cause for alarm, but are to be expected after an extended period of historically low loss rates.

“I’ve called this now actually for almost two years so that nobody would be surprised,” he said. However, he added, “people still seem to be surprised that we are at the end of that cycle.”

(Reporting by Dan Freed; editing by David Gregorio)

Copyright 2017 Thomson Reuters. Click for Restrictions.

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