JPMorgan net falls 50 percent
NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N), said on Wednesday quarterly profit fell 50 percent, but the third-largest U.S. bank was able to skirt the massive losses that have crippled many rivals, and its shares rose as much as 5 percent.
The bank set aside $4.42 billion for loan losses, and took about $2.6 billion of write-downs tied to mortgages, loans to fund corporate buyouts, and tight credit markets. Nevertheless, its problems paled compared to those at Citigroup Inc (C.N), UBS AG (UBSN.VX) and Merrill Lynch & Co MER.N.
"Overall, we feel pretty good about where we are," JPMorgan Chief Executive Jamie Dimon said on a conference call with analysts.
Net income in the first quarter fell to $2.37 billion, or 68 cents per share, from $4.79 billion, or $1.34, a year earlier. Profit included a $955 million gain from a stake in credit card network Visa Inc (V.N), which went public last month.
Profit topped the average analyst forecast of 64 cents per share according to Thomson First Call, which excluded the Visa gain. Reuters Estimates, which included Visa, said the average estimate was 71 cents.
Net revenue fell 11 percent to $16.89 billion, meeting expectations.
"JPMorgan did relatively well in a very difficult operating environment," Sandler O'Neill analyst Jeff Harte said.
Citigroup, the largest U.S. bank, may post a quarterly loss close to $5 billion on Friday, analysts on average expect.
In morning trading, the bank's shares were up $1.97, or 4.7 percent, at $44.09 on the New York Stock Exchange.
BEAR STEARNS
JPMorgan said the $4.42 billion set aside for loan losses was more than quadruple the $979 million set aside a year earlier. Net charge-offs more than doubled to $1.91 billion. JPMorgan's total allowance for credit losses rose $2.52 billion from the end of 2007 to $12.6 billion.
The bank's write-downs, meanwhile, included about $1.2 billion for mortgages, $1.1 billion for leveraged loans, and $266 million tied to collateralized debt obligations.
JPMorgan remains on track to complete its purchase of the Bear Stearns Cos BSC.N this quarter. It agreed to buy the troubled investment bank last month for $10 per share.
On Tuesday, JPMorgan said it had boosted its stake in Bear to 49.8 percent, all but guaranteeing shareholder approval.
Though Bear's business deteriorated significantly in the last month, JPMorgan Chief Financial Officer Mike Cavanagh told reporters that Bear's financial performance is tracking "basically the way we expected initially."
Dimon said jobs will be cut at both companies, and that the purchase doesn't preclude JPMorgan from another acquisition.
He is thought to be interested in SunTrust Banks Inc (STI.N), a large U.S. Southeast bank, and reportedly pursued an offer for Washington Mutual Inc (WM.N).
Dimon cautioned that financial markets face a long period of uncertainty, and that these markets and a economy that may be in recession will weigh on results all year, if not longer.
Still, he expressed optimism that a recovery for credit markets is in sight. "I do think we're well more than half way through -- maybe 75 to 80 percent through," he told reporters. "That side is working itself out."
WRITE-DOWNS, LOSSES
Investment banking operations suffered an $87 million loss, compared with a year-earlier $1.54 billion profit, hurt by the write-downs. Net revenue fell 52 percent to $3.01 billion.
Retail banking suffered a $227 million loss, compared with a year-earlier $859 million profit. Those operations set aside $2.49 billion for soured loans, including home equity loans.
In credit card services, profit fell 36 percent to $609 million. Cavanagh said he expects card charge-offs to rise gradually this year.
"Relative to what we've seen over the last six months there don't seem to be nearly the massive downside surprises (and) write-offs," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
Profit rose 53 percent to $403 million in treasury and securities services, fell 16 percent to $356 million in asset management, dipped 4 percent to $292 million in commercial banking, and rose 63 percent to $1.03 billion in corporate and private equity operations. The latter stemmed mainly from Visa.
JPMorgan ended the quarter with 3,146 branches and $1.64 trillion of assets.
(Additional reporting by Dominic Lau, Ellis Mnyandu and Sitaraman Shankar; Editing by Derek Caney)
