Keenly watched half-year and
second-quarter results from the big US banking groups have largely
been upbeat – but consumer finance and, in particular, card
portfolios, are showing substantial weakness in the face of the
ongoing US economic malaise.

Contrary to a year ago, when retail banking
businesses helped support critically damaged investment banking
units (indeed, investment banks like Goldman Sachs and Morgan
Stanley changed their legal structure to become deposit-taking
entities as a means to receive federal support), it is the capital
markets and investment banking arms of the big banks now supporting
enfeebled retail banking divisions.

JPMorgan Chase, largely viewed as having
navigated its way through the chaos the best of any bank in the US,
reported second-quarter 2009 net income of $2.7 billion, an
increase of 36 percent compared with net income of $2 billion in
Q208. But while its investment bank brought in net income of $1.5
billion, its retail financial services unit made a profit of just
$15 million while its card services unit recorded a net loss of
$672 million.

Chase’s managed net charge-off rate for the
quarter was 10.03 percent, up from 4.98 percent in the prior year
and 7.72 percent in the prior quarter.

Bank of America, still digesting the mighty
Merrill Lynch franchise, reported relatively bullish earnings of
$3.2 billion, though its card portfolio lost $1.62 billion.

And Citi, reporting for the first time as two
separate entities – Citicorp and Citi Holdings (or, in more
technical terms, ‘Good Bank’ and ‘Bad Bank’) – reported a combined
quarterly income of $4.3 billion.The combined group’s bloated asset
base finished the quarter at $1.85 trillion, down 12 percent
year-on-year, and down 22 percent from peak levels in the third
quarter of 2007.

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See next issue for full US
results breakdown


US – second quarter earnings from
selected banks, ranked by total assets


Group net income ($bn)

Retail banking net income

Cards unit net income

Total assets ($bn)


% change vs Q109


% change vs Q109


% change vs Q109


Bank of America(1)








JPMorgan Chase(2)
















E=estimate. (1) Bank of America retail
banking figures taken from a new category called ‘Deposits’. Cards
income from ‘Global Card Services’ unit; (2) JPMorgan Chase’s
retail banking figures taken from its ‘Retail Financial Services’
unit. Cards income from ‘Card Services’ unit; (3) Citigroup is now
split between Citicorp and Citi Holdings. All figures are for the
‘good bank’ half, Citicorp, which is itself focused mainly on
regional consumer banking and Citi’s institutional clients group
Source: RBI