JPMorgan Says Card Spending Rose 10% and Fewer Card Loans Went Bad: What Big Bank Earnings Say About Household Finances

The biggest U.S. bank's latest results suggest many households are still spending and keeping up with their card bills, even with high prices and high interest rates.

The nation's biggest banks started reporting their July-to-September results on Tuesday, Oct. 13, and JPMorgan Chase, the largest of them, went first.

Investors focused on a disappointment in the bank's Wall Street trading business. JPMorgan reported a surprise drop in its fixed-income trading revenue, which comes from trading bonds, interest rates and commodities, according to Bloomberg, and its shares swung in choppy premarket trading. But for everyday readers, the more interesting numbers are in the part of the bank that serves regular customers: checking accounts, credit cards, mortgages and car loans.

Because Chase serves tens of millions of U.S. households, its results offer a rough check on how Americans are handling their money. Here's what the numbers show.

What JPMorgan reported

JPMorgan earned $15.3 billion in the third quarter, up 6% from a year earlier, or $5.57 a share, according to the earnings release it filed with the Securities and Exchange Commission. Total revenue rose 8% to about $50.2 billion.

The bank's net interest income, the money it makes from the gap between what it earns on loans and what it pays on deposits, rose 13% to about $27 billion. Higher interest rates generally help banks here, because they can charge more on loans.

The bank set aside $2.7 billion as a provision for credit losses, money reserved to cover loans that may not be repaid. That was down 19% from a year earlier.

Its consumer banking division, which includes Chase branches and credit cards, earned $5.7 billion, up 13%, on revenue of about $21.2 billion, up 9%.

The consumer snapshot: spending up, card losses down

The numbers tied directly to household budgets were mostly steady or improving.

Spending kept growing. Customers spent $539.5 billion on Chase debit and credit cards in the quarter, up 10% from a year earlier. Some of that reflects higher prices rather than people buying more, but it shows households are still opening their wallets.

Fewer card loans went bad. The net charge-off rate on Chase credit cards, the share of card balances the bank wrote off as unlikely to be repaid, fell to 2.91%. That's down from 3.15% a year earlier and 3.34% in the second quarter. A falling rate suggests more cardholders are keeping up with their payments.

People are carrying more card debt. Credit card loans grew 7% from a year earlier to $252.7 billion. That's faster than the 2% growth in the consumer bank's overall loans.

Deposits edged up. Consumer deposits rose 4% to about $1.1 trillion.

Wells Fargo, which also reported on Tuesday, earned $6.0 billion, or $1.87 a share, according to TipRanks and Newsquawk. Its average loans and deposits were both up 11% from a year earlier, TipRanks reported, and revenue in its consumer banking and lending business grew 5%.

What this means for your wallet

Bank earnings won't change your bills overnight, but they offer a few useful signals.

First, the picture of the "average" household looks reasonably stable. Lower card charge-offs and higher spending suggest that, overall, people are still managing their debts. That fits with other recent data showing the economy has held up despite high prices.

Second, the average hides a lot. Card balances growing faster than the bank's other consumer loans can mean some families are leaning on credit to cover everyday costs. With credit card interest rates often above 20%, a balance that isn't paid off each month can grow quickly. If you're carrying a balance, consider making a plan to pay down the highest-rate card first, or ask your issuer whether it can lower your rate.

Third, banks are doing well on interest. Strong net interest income means banks are earning a healthy spread between what they charge borrowers and what they pay savers. If your savings sit in a basic account earning very little, it may be worth comparing high-yield savings accounts or certificates of deposit (CDs), which typically pay more when rates are high. Checking that your deposits are covered by FDIC insurance is a smart habit, too.

Finally, if you're planning to borrow soon, for a car, a home or a personal loan, a healthy bank is generally willing to lend, but the rate you get depends heavily on your credit score. Paying bills on time and keeping card balances low relative to your limits can help you qualify for better terms.

What to watch next

Bank of America, Morgan Stanley and others report on Wednesday, Oct. 14, the same day the government releases its September inflation report. Together, they'll add to the picture of how households are coping with higher prices and borrowing costs heading into the holiday shopping season.

This article is for education only and is not financial advice. Everyone's situation is different.