Chase reported another strong quarter of bank credit card purchase dollar volume (PDV) in the second quarter (Q2/14). Delinquency and charge-offs declined significantly. Despite the strong PDV, credit card outstandings remained soft, reflecting the shift to increased transactional use of bank credit cards.
Second quarter card net income of $709 million was down sharply due to a higher provision for credit losses, higher noninterest expense and lower net revenue.
Q2/14 bank credit card PDV increased 12% year-on-year (Y/Y) to $118.0 billion, compared to $104.5 billion in the prior quarter and $105.2 billion in the year ago quarter. Chase bank credit card outstandings inched up by 1% Y/Y to $126.1 billion.
Delinquency (30+ day) dropped 28 basis points (bps) Y/Y to 1.41%. Sequentially, bank credit card delinquency was down 20 bps. Charge-offs of 2.88% were also down from 2.93% in Q1/14 and 3.31% Q2/13.
At the end of the second quarter Chase had 65.8 million open accounts with 31.8 million posting sales activity. Chase notes it opened 2.1 million new accounts in the quarter, on par with Q1/14. About 54% of the new accounts were acquired online.
Card Services net revenue as a percentage of average loans was 12.15%, compared with 12.59% in the prior year and 12.22% in the prior quarter. Return on equity was 18% on $19.0 billion of average allocated capital.
RAM Research projects Chase PDV to remain strong in the third quarter and will likely top $122 billion.
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Period-end credit card loans included loans held-for-sale of $508 million, $304 million, $326 million and $310 million at June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively. These amounts are excluded when calculating delinquency rates and the allowance for loan losses to period-end loans. There were no loans held-for-sale at June 30, 2013.