After a hectic first half of the year, second quarter results from some of the country’s biggest banks showed Tuesday that the US consumer largely managed to hold steady as market volatility and an uncertain wave of tariff-related sticker shock rippled through American households.
JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), three of the country’s four largest banks, all reported results early Tuesday that showed increases in their consumer banking divisions’ revenue from higher loan balances on their customers’ cards.
But even with customers holding more debt on their credit cards, the rate of 90-day-plus delinquencies — or missed payments — was roughly flat year over year across all three banks.
“The consumer basically seems to be fine,” JPMorgan Chase CFO Jeremy Barnum said on the company’s earnings call on Tuesday.
Net charge-offs, or the amount of loans that a bank writes off as uncollectible, were up by only 1% across the consumer division of JPMorgan and roughly flat at Citi. Wells Fargo customers notched the best performance out of the three, seeing a drop of 10% in written-off loans.
Citi traded up more than 3% following its earnings report, while JPMorgan lost 0.4%. Wells Fargo lost more than 5% after the bank missed analyst estimates and lowered its full-year guidance for net interest income.
Some of the resiliency reflected in these results may be skewed by income levels across consumer banking customers. Just last summer, leadership of all three banks warned that the financial situations of their lower-income customers were increasingly stressed, which Barnum acknowledged on JPMorgan’s call.
“If you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower income bands and you’re seeing the higher income bands,” Barnum said. “But that’s always true.”
“As we’ve said before, fundamentally, while there are nuances around the edges, consumer credit is primarily about labor markets,” Barnum added. “And in a world with [a] 4.1% unemployment rate, it’s just going to be hard, especially in our portfolio to see a lot of weakness.”
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“As we look ahead, what we see regarding the health of our clients and customers has not changed,” Wells Fargo CEO Charles Scharf said on the bank’s Tuesday earnings call. “Consumers and businesses remain strong as unemployment remains low and inflation remains in check.”
Inflation data out Tuesday morning showed consumer prices rose at a faster rate in June, though increases remain more moderate than what consumers faced in the years after the pandemic.
And with stocks near record highs, banks are leaning into the higher-end of their consumer base and broadening premium offerings.
In June, JPMorgan announced that consumers of the bank’s premier travel card, the Chase Sapphire Reserve card, would begin paying an increased yearly fee of $795 — a nearly 45% increase from the previous $550 fee — amid an overhaul of the card’s benefits offerings.
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Citi announced during its Q2 earnings call on Tuesday that the bank would be launching its own “Strata Elite” premium credit card targeted toward the same affluent consumers JPMorgan is chasing with Sapphire Reserve. Details around annual fees and benefits were not clarified in the presentation.
JPMorgan is also working on opening 14 new offices in locations such as Palm Beach, Florida, and Madison Avenue in New York City for customers with balances of $750,000 and up, according to reporting by Business Insider.
The Street will get another look at the state of consumer finances on Wednesday, when Bank of America (BAC), Goldman Sachs (GS), and PNC Financial Services Group (PNC) all open their books.
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