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JPMorgan projects no impact from Equifax hack, reports flat C&I loan growth


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JPMorgan projects no impact from Equifax hack, reports flat C&I loan growth

JPMorgan Chase & Co. management said the bank expects zero increased spend from the Equifax Inc. hack and has so far seen no increase in fraud. On other operating metrics, management discussed a reserve build related to hurricanes, slower loan growth and a large year-over-year dip in trading revenue.

CFO Marianne Lake said the bank did not plan to increase any spending on fraud prevention due to the wide-ranging hack of Equifax, a major credit reporting agency. Lake said fraud prevention was an ongoing exercise and that the bank has already implemented multiple factors for customer authentication in an effort to prevent fraudulent credit requests. Lake also said the bank has not seen an increase in fraud attempts following the Equifax event.

"This is not the first breach, nor will it be the last breach. And so as a result, we have been constantly evolving and refining the way we think about fraud prevention, detection, underwriting," Lake said during the Oct. 12 earnings call discussing results.

Separately, the bank reported no loan growth in its corporate and investment bank, with average loans for the segment actually ticking down to $112.5 billion in the third quarter from $115.8 billion in the second quarter. Across the entire bank, the company reported 2% quarter-over-quarter loan growth. Lake said the company has seen a slowdown in commercial and industrial loans because the bank's clients have strong balance sheets that have enabled access to capital markets. On commercial real estate, Lake attributed the moderation in growth to higher rates and a fiercely competitive landscape.

On charge-off rates, Lake said the bank expects a small increase into next year as credit normalizes. Related to hurricane damage specifically as the South was battered by hurricanes Harvey, Irma and Maria, Lake said the bank had set aside $55 million in reserves. The vast majority of that total, roughly $50 million, was tied to the bank's mortgage business with a small amount for wholesale loans.

Finally, on trading revenue, management mostly chalked up significant year-over-year declines to a strong 2016 third quarter that made for tough comparisons. JPMorgan's corporate and investment bank segment reported markets revenue of $4.5 billion in the third quarter, a 21% drop from the year-ago quarter, led by a 27% decline in fixed income markets revenue.