Earnings Soar for Most Major Banks
Most major banks saw their profits soar during the second quarter of 2013. Quarterly earnings increased as banks lowered their credit loss provisions, the economy improved and customers paid down their debts.
The reports also showed that the credit card business for most issuers is not as profitable as a year ago as consumers seem to be doing a better job paying down their balances.
* Bank of America reported a 63% jump in net income to $4.01 billion from $2.46 billion a year earlier. But credit card revenue was down. Credit cards added $908 million to net income during the second quarter, down 2% from $929 million a year ago. Credit card revenue earned before expenses declined $122 million, or 3%, to about $3.8 billion in the quarter. The bank reduced the amount it set aside for credit card loss expense by $562 million. Other expenses in the card unit dropped $131 million. The bank’s share of U.S. credit debt has shrank from about $95 billion a year ago to $89.7 billion during the second quarter of this year. The bank issued 975,000 new cards in the second quarter, an increase of 25,000 versus a year ago, according to CEO Brian Moynihan.
* JPMorgan Chase had a 31% increase in quarterly profits. The average credit card debt dropped $2.34 billion as consumers continue to pay down down their balances, but credit card sales volume hit a new record of $105.2 billion, a 10% increase.
* Citigroup second quarter profit rose 41%. But Citi-branded cards revenues declined 1% to $2.0 billion, reflecting a 5% decline in average loans.
* Capital One profit jumped to $1.12 billion from $93 million a year earlier. Capital One reports that card purchases rose 12% to $50.8 billion from the same period in 2012. U.S. card balances were $70.5 billion at the end of June, about the same as March. The company will repurchase as much as $1 billion of stock after completing the sale of a Best Buy Co. credit-card portfolio.
* American Express net income grew 5% in the second quarter. Cardholder spending increased by 7% to $237.7 billion during the quarter. Cardholder loans grew 3% to $63.1 billion from a year earlier. Overall revenue increased 4% to $8.25 billion.
Discover’s earning will be released July 23.