The third quarter saw consumers pay their credit card bills so reliably that JPMorgan Chase, the first of the largest U.S. banks to report its earnings, saw a 23 percent increase in third-quarter profits, according to Bloomberg. The jump came even as revenues fell 11 percent.
However, profit margins narrowed because expenses rose 7 percent even as provisions for losses on mortgages, credit cards and other loans dropped $5.8 billion in the third quarter, the report said. That drop was less than the one observed last quarter.
“You continue to see an improvement in credit quality,” Charles Peabody told Bloomberg, “albeit in the third quarter at a slowing pace.”
Banks have been struggling to cut costs associated with litigation that results from the credit crisis, the report said. But as consumer credit has improved, the costs associated with writing off bad debt has necessarily declined, leading to larger profits.
Consumers have been paying their bills with greater regularity for months now, leading to declines in charge offs and delinquencies. In addition, they have also been paying off more of their debt every month, evidenced by drops in total consumer credit nationwide.
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