The provision for credit losses was $1.3 billion, compared with $1.1 billion in the prior year and $1.2 billion in the prior quarter. The current-quarter provision reflected lower net charge-offs. The prior-year provision included a $500 million reduction in the allowance for loan losses. The Credit Card net charge-off rate 1 was 3.50%, down from 4.29% in the prior year and 3.57% in the prior quarter; the 30+ day delinquency rate 1 was 2.10%, down from 2.81% in the prior year and 2.15% in the prior quarter. The Auto net charge-off rate was 0.36%, down from 0.37% in the prior year and 0.74% in the prior quarter. The prior quarter included the impact of incremental charge-offs related to auto loans discharged under Chapter 7 bankruptcy.
Noninterest expense was $2.2 billion, an increase of $146 million, or 7%, from the prior year, driven by the write-off of intangible assets associated with a non-strategic relationship.
Key Metrics and Business Updates: (All comparisons refer to the prior-year quarter except as noted)
- Credit Card average loans were $124.7 billion, down 3% from prior year and flat compared with the prior quarter.
- #1 credit card issuer in the U.S. based on outstandings 2; #1 Global Visa issuer based on consumer and business credit card sales volume. 2
- Credit Card sales volume 2 was $101.6 billion, up 9% compared with the prior year and 5% compared with the prior quarter; Card Services general purpose credit card sales volume growth has outperformed the industry since the first quarter of 2008. 2
- Card Services net revenue as a percentage of average loans was 12.82%, compared with 12.26% in the prior year and 12.46% in the prior quarter.
- Merchant processing volume was $178.6 billion, up 17% from the prior year and 9% from the prior quarter; total transactions processed were 8.2 billion, up 21% from the prior year and 11% from the prior quarter.
- Average auto loans were $49.3 billion, up 5% from the prior year and 2% from the prior quarter.
- Auto originations were $5.5 billion, up 12% from the prior year and down 13% from the prior quarter.
CORPORATE & INVESTMENT BANK (CIB)
|Results for CIB($ millions)||3Q12||4Q11|
|4Q12||3Q12||4Q11||$ O/(U)||O/(U) %||$ O/(U)||O/(U) %|
|Provision for Credit Losses||(445)||(60)||291||(385)||NM||(736)||NM|
Discussion of Results:
Net income was $2.0 billion, up significantly from the prior year. These results reflected higher net revenue and benefit from the provision for credit losses, partially offset by higher noninterest expense. Net revenue was $7.6 billion, compared with $6.3 billion in the prior year. Net revenue included a $567 million loss from debit valuation adjustments (“DVA”) on certain structured and derivative liabilities resulting from the tightening of the Firm’s credit spreads; the prior year included the same size loss from DVA of $567 million. Excluding the impact of DVA, net income was $2.4 billion 1, up $1.0 billion, or 77%, from the prior year, and net revenue was $8.2 billion 1, up $1.3 billion, or 19%, from the prior year.
Banking revenue was $3.2 billion, compared with $2.4 billion in the prior year. Investment banking fees were $1.7 billion (up 54%), which consisted of record debt underwriting fees of $990 million (up 79%), equity underwriting fees of $265 million (up 57%), and advisory fees of $465 million (up 17%). Treasury Services revenue was $1.1 billion, up 1% from the prior year. Lending revenue was $382 million, compared with $279 million in the prior year, driven by higher fees and net interest income, as well as lower mark-to-market losses from hedges of retained loans.
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