The bumpy economy and its toll on businesses and consumers prompted JPMorgan Chase & Co. to set aside more money to cover loan losses in several business units, even as overall credit health improved outside of mortgages.
"It's hard not to be cautious now," JP Morgan's CEO, Jamie Dimon said during an analyst call. Maintaining high loss reserves reflects "an abundance of caution on our part," he said later.
It reported $2.5 billion of chargeoffs, the actual amount of money lost on bad loans in the period. They were down 19% quarter to quarter and 49% year over year thanks to an easing of losses on home loans and other types of real estate credits. Nonperforming assets also fell in the three business lines - retail, investment and commercial banking - driving total nonperformers down to about $12.2 billion.
Key gauges of consumer health such as the rate of people missing a single credit card payment also improved.
But provisions, which reflect money the bank estimates it could lose on bad loans in the future, rose sharply from the prior quarter (up 26%) while staying much lower than a year ago (down 29%). Total provisions were $2.4 billion.
The main driver of the quarter-to-quarter increase was JPMorgan Chase's credit cards and auto business, where provisions rose $320 million even as cards charge-offs fell. Delinquencies were flat in the retail bank as provisions rose about 3% from the prior quarter.