JPMorgan profit plummets on loan losses
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NEW YORK (Reuters) - JPMorgan Chase & Co's (JPM.N) quarterly profit fell 84 percent, due to mark-downs on underperforming loans, but the results still beat analysts' forecasts.
JPMorgan, whose shares slipped 2.5 percent in pre-market trading, was hit by weakness in its leveraged lending and mortgage-related portfolios, underscoring the strains of the credit crisis.
"Given the uncertainty in the capital markets, housing sector and economy overall, it is reasonable to expect reduced earnings for our firm over the next few quarters," Chief Executive Jamie Dimon said in a statement.
The bank's adjusted loss of 6 cents per share, before an extraordinary gain related to the acquisition of Washington Mutual's banking operations, beat analyst expectations of a loss of 29 cents per share, according to Reuters Estimates.
Third quarter net income fell to $527 million, or 11 cents a share, from $3.37 billion, or 97 cents a share, a year earlier.
JPMorgan's shares initially rose in premarket trading, but then turned lower and were down a bit less than 1 percent.
The bank, which is set to get a $25 billion cash injection from the U.S. government's financial rescue package, last month sold $10 billion of stock to fund its $1.9 billion acquisition of Washington Mutual Inc.
The takeover, which followed seizure of WaMu by regulators, was JPMorgan's second this year of a financial institution on the verge of collapse. In March, it agreed to buy stricken investment bank Bear Stearns Cos Inc.
The purchase of Wamu, the largest bank to fail in U.S. history, saddled the bank with the troublesome mortgages that caused painful write-downs and credit losses for the thrift. As part of the acquisition, JPMorgan wrote down more than $30 billion and said it would incur $1.5 billion in pre-tax costs.
The bank posted a write-down of $3.6 billion from its investment banking operations, taking its total credit losses and write-downs since the credit crunch began last year to $12.3 billion, still far below that of peers such as Citigroup Inc (C.N), which has posted over $50 billion.
Shares in JPMorgan fell $1.01 to $39.70 in pre-market trading, from $40.71 on Tuesday.
(Reporting by Elinor Comlay; Editing by Derek Caney)
