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What Could Drive J.P. Morgan’s Consumer and Community Banking?

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Consumer and community banking

JPMorgan Chase’s (JPM) Consumer and Community Banking division garners its revenues from its credit card business, consumer and business banking, and mortgage banking. The bank has seen a mixed performance with higher revenues in consumer and community banking partially offset by the subdued performance of its mortgage banking and credit card business. In 2Q17, JPMorgan’s consumer and community banking division could see marginally better growth in credit card spending and penetration and net income margin expansion.

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In 1Q17, the division posted net income of $2.0 billion as compared to $2.5 billion in the prior year, mainly due to lower mortgage banking, commerce solutions, and auto. It managed net revenues of $11 billion, a 1% YoY (year-over-year) fall. The division’s consumer and community banking has seen a growth of 8% in revenues to $4.9 billion on higher deposit growth. However, its mortgage banking revenues fell 18% mainly due to lower net servicing revenues.

Credit card business

JPMorgan’s credit card business faces competition from credit card players like Visa (V), MasterCard (MA), and other banks (XLF) like Citigroup (C). The bank’s division has seen strong growth in corporate partnerships, retail growth, and growth across the regions. It saw a decline of 3% in credit card business revenues mainly due to origination costs of new accounts, mostly offset by higher loan balances and auto lease volumes.

Overall, the division also saw a 5% rise in expenses, mainly due to higher auto lease depreciation and business growth.

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