JP Morgan Chase received high marks from industry experts given their ability to steer clear of the sub-prime mortgage mess. However, the declining financial health of American consumers has caused the bank to suffer losses in their credit card division. A recent regulatory filing by the bank warns of the potential for substantial credit related losses in the future.
In Q3, JP Morgan's credit card portfolio had a delinquency rate of around 5% which is lower compared to recent reports by competing firms. Given that the highest delinquency rate in the past twenty three years was 7% in March of 2002 (last recession period), it appears that the credit card industry is headed for difficult times in 2009.