JPMorgan’s Q3 Card Purchases Up 13%, Outpacing Industry Growth

by Trefis Team
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JPMorgan Chase
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JPMorgan’s growing presence in the affluent card segment over recent years, coupled with its position as the largest card lender in the U.S., has helped its card purchase volumes grow at a faster rate than any of its competitors. The largest U.S. bank witnessed a 13% jump in card purchase volumes between Q3 2016 and Q3 2017 – a commendable show considering the fact that nearly one-fifth of all card payments in the country (in dollar terms) are made using cards issued by the bank.

We maintain a $98 price estimate for JPMorgan’s shares, which is about 10% below the current market price.

The credit card purchase volume for individual issuers is taken from their respective quarterly earnings releases. Figures for American Express and Discover represent purchase volumes only for cards issued by them, with purchases made on AmEx or Discover-branded cards issued by other banks included in the total figure for the issuing bank. The total U.S. card purchase volume is as detailed by us in our previous article.

While JPMorgan has a sizable lead over competitors in terms of card purchase volumes thanks to its position as the largest issuer of credit cards in the country, Citigroup displaced American Express from the second spot in Q3 2016, when the transfer of the Costco card portfolio was finalized. Notably, the six largest card issuers accounted for more than 60% of the total credit card purchases in a quarter, with the top four issuers garnering a market share of nearly 50%.

As detailed in the table above, the largest card issuers have seen their purchase volumes grow 9% y-o-y – in line with the 9% growth witnessed by the overall industry. However, JPMorgan is the only card issuer in this list to report growth at well above the industry average. Notably, the growth has not been due to any acquisitions, and can be attributed to strong growth in the bank’s affluent customer base. The chart below captures the change in JPmorgan’s card purchase volumes over the years and our forecast for this metric. You can understand how changes to this figure affect our price estimate for the banking giant by making modifications here.

See full Trefis analysis for JPMorgan ChaseBank of America | Citigroup | Capital OneAmerican Express | Discover

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