NEW YORK—Expect U.S. credit card losses to rise, according to largest bank in the nation.
Gordon Smith, head of JPMorgan Chase & Co.’s consumer businesses, recently stated that issuers should expect higher losses, Reuters reported.
Smith said Chase is being "surgical" in determining where to tighten credit standards but he added that lenders industrywide ought to be leaning toward stricter credit card lending standards rather than looser ones.
JPMorgan's earnings have shown rising sales volumes as well as weakening credit trends in its credit card business, consistent with other lenders. A recent investor presentation by the bank said Chase Card has only modest exposure to credit card borrowers with FICO scores lower than 660, Reuters noted.
A Fitch Ratings report last month said credit card loss rates, which have already been climbing, are likely to rise for several more quarters as loan growth has increased, driven partly by lower credit standards. Smith said rising losses should be no cause for alarm, but are to be expected after an extended period of historically low loss rates, Reuters noted.
"I've called this now actually for almost two years so that nobody would be surprised," Smith said, adding, "people still seem to be surprised that we are at the end of that cycle."