JPMorgan's Card Credit Trends Improve: Are Losses Past Their Peak?

JPM's improving card credit trends and lower 2026 loss outlook signal stabilization, though elevated rates remain a risk to further progress.

Swayta Shah

2 min read

JPMorgan’s JPM consumer credit trends improved in the second quarter of 2026, offering an encouraging signal on card losses. The bank’s Card Services net charge-off (NCO) rate fell to 3.34% from 3.47% in the first quarter and 3.40% a year earlier, suggesting that credit normalization may be stabilizing. Management now expects the 2026 Card NCO rate to be roughly 3.2%, down from its prior outlook of nearly 3.4%, reflecting better-than-expected consumer credit performance.

The improvement is notable because card losses had been a concern as consumers adjusted to elevated borrowing costs and accumulated debt. JPMorgan’s results indicate that losses are no longer worsening at the pace seen earlier in the cycle. Card activity also remains healthy, with debit and credit card sales volume rising 10% year over year and higher revolving balances supporting Card Services net interest income in the second quarter.

Still, it may be premature to declare that the worst is over. Consumer & Community Banking recorded $2.2 billion of NCOs in the quarter, up $70 million from a year earlier, mainly due to Card Services. A higher-for-longer interest rate backdrop is expected to keep borrowing costs elevated and put pressure on debt-servicing capacity, particularly for financially stretched card borrowers, potentially slowing further improvement in card losses. Management, however, continues to view the labor market as the key determinant of consumer credit performance.

Even so, the direction is encouraging. The lower Card NCO outlook, coupled with spending growth, suggests JPMorgan’s consumer portfolio is absorbing normalization without a sharp deterioration in borrower behavior. Resilient employment and consumer finances will help contain credit stress despite elevated rates.

A sustained easing in card losses will likely support earnings by limiting future credit costs while allowing JPMorgan to benefit from growth in revolving balances. The next few quarters will be critical in determining whether better-than-expected credit performance can persist as elevated interest rates continue to test household finances.

How JPM’s Peers Fared in Terms of Credit Trends in Q2

Two close peers of JPMorgan are Bank of America BAC and Citigroup C.

Bank of America’s card credit trends improved. The credit card NCO rate declined to 3.55% from 3.64% in the first quarter and 3.82% a year earlier. Bank of America also reported improvement in both early- and late-stage delinquencies for the fifth consecutive quarter on a year-over-year basis, indicating continued normalization in card credit quality.

Citigroup’s card credit trends also improved. U.S. Consumer Cards net credit losses were $1.85 billion, roughly flat year over year, while provision fell to $1.6 billion as portfolio quality improved. Citigroup witnessed better-than-expected credit performance across its resilient customer base.

JPMorgan’s Price Performance, Valuation and Estimates

JPM’s shares have gained 14.8% over the past three months.

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From a valuation standpoint, JPMorgan trades at a 12-month trailing price-to-tangible book (P/TB) of 3.28X, below the industry average.

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The Zacks Consensus Estimate for JPMorgan's 2026 earnings suggests a 22.6% rise on a year-over-year basis, while 2027 earnings are expected to grow at a rate of 0.3%. In the past month, earnings estimates for 2026 have been revised marginally lower to $24.93. For 2027, estimates have moved upward to $25.02.

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JPMorgan currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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