1 Big Bright Spot You're Overlooking at These Big Banks

Here's why the results at Wells Fargo and JPMogan Chase foretell good quarters for credit card companies.

Jan 14, 2014 at 9:43PM

When investors think of big banks such as Wells Fargo (NYSE:WFC) and JPMorgan Chase (NYSE:JPM), most think of mortgages. After all, these two behemoths are first and second in the mortgage business.

But a much smaller business -- credit cards -- is performing incredibly well for at least one major bank, which bodes well for the industry as a whole.

JPMorgan's card business is on a tear
JPMorgan is the largest card issuer and credit card company in the world, reporting average credit card balances of $127.8 billion in its most recent earnings supplement. As credit card balances grow, the rate at which customers repay their debts is improving. JPMorgan's charge-off rate fell to 2.85%, down from 3.5% just one year ago.

Jpm Cc

And it looks as if the trend will only continue. This quarter, only 1.67% of balances were in the 30-day-plus delinquency column, down from 2.1% in the year-ago period.

Wells Fargo's quarter showed similar year-over-year improvement. The company reported that net charge-offs tallied to 3.38% of average loans, down from 3.7% one year ago.

Why JPMorgan trumps Wells Fargo in cards
Compared with most credit card companies, including Wells Fargo, JPMorgan's Chase brand counts the most creditworthy borrowers as cardholders. It's safe to put it up there with American Express (NYSE:AXP), another "prime" credit card issuer.

A quick look at comparison site CreditKarma shows their average member approved for a Chase Sapphire card had a credit score of 745, compared with a 726 score for American Express' Everyday card. Wells Fargo's ordinary Visa credit cardholder had an average score of 696.

What's interesting here is whether Wells Fargo's and JPMorgan's results will be a a bellwether for the credit card industry as a whole.

Capital One and American Express report earnings on Jan. 16. Discover Financial Services follows on January 23. Last year, the industry reported that charge-offs hit a level not seen since 1990. If the trend of low delinquencies continues, credit card companies could be set to log a very impressive 2014. 

A bank customers and investors love
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Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends American Express and Wells Fargo and owns shares of Capital One Financial, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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