English majors know that the subtext is often more important than they text. Sterne Agee’s Terry McEvoy and team apply that principle to JPMorgan Chase’s (JPM) earnings–and its results contain a nugget of good news for Visa (V) and MasterCard (MA):
Reuters JPMorgan Chase generated 11.7% YoY growth in card spending, consistent with last quarter's growth rate and a positive read through for Visa's U.S. payment volume growth (JPM is V's largest issuer). Chase Paymentech, JPMorgan Chase's merchant acquirer division, also posted double digit YoY growth in volumes (+14.7%) which bodes well for both Visa and MasterCard, and the merchant acquirers. Of note, despite double-digit growth in volumes, merchant services transactions slowed, the third consecutive quarter of slowing growth in transactions. The disconnect could be attributable to more transactions being aggregated, or significantly higher average ticket amounts per transactions. We would speculate it is due to transaction aggregation given Chase Paymentech's legacy strength in eCommerce (online), and the fact aggregation is used more frequently for online purchases.
Shares of JPMorgan Chase have fallen 1.4% to $57.37 at 10:30 a.m., while Visa is unchanged at $204.29 and MasterCard has gained 1.3% to $70.66.
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