JPMorgan Chase's 3Q profit jumps 23%

JPMorgan Chase & Company said on Wednesday that its third-quarter profit jumped 23 per cent because the banking giant was able to set aside less money to cover loan losses.

Chief Executive Officer Jamie Dimon did warn that loan losses are still high in both the mortgage and credit-card portfolios, but they are no longer rising like they did during the recession.

That enabled JPMorgan Chase to set aside US$1.55 billion to cover losses in its retail financial services division, less than half the US$3.99 billion in loss provisions recorded in the same period a year ago.

Loan loss provisions in its credit-card business fell to US$1.63 billion from US$4.97 billion last year.

Dimon said the bank, the country's second-largest by assets and the first big bank to report quarterly results, expects losses in its credit-card division to fall in the next quarter.

The New York bank earned US$4.42 billion, or US$1.01 per share. It earned US$3.59 billion, or 82 cents, during the same quarter last year.

The results came in well ahead of the 90 cents per share that analysts polled by Thomson Reuters were expecting. Shares rose 3 cents to US$40.43 in morning trading on Wednesday.

Profit in the in\vestment bank, which has been a big strength for JPMorgan Chase in recent quarters, fell 33 per cent. The drop was due mainly to lower fees from underwriting stock offerings.

Debt underwriting picked up sharply, however, as many companies took advantage of historically low interest rates to raise new cash through the bond market instead of through issuing new shares.

Income from trading currencies, bonds and other fixed-income products fell 38 per cent during the quarter as interest rates remained low.

Huge trading profits

JPMorgan Chase and other major banks including Goldman Sachs Group Inc. posted huge trading profits last year as financial markets were recovering from the credit crisis, allowing them to offset losses from defaults on mortgages and credit cards.

Now that investment banking profit is slipping, a pickup in earnings from retail banking is helping JPMorgan Chase.

Income from its retail banking division, which had the sharp decline in loan loss provisions, jumped to US$907 million from just US$7 million during the third quarter last year.

JPMorgan's credit-card business earned US$735 million in the third quarter after losing US$700 million during the third quarter in 2009.

Even though JPMorgan Chase slashed its loss provisions during the quarter, it still holds reserves of 5.1 per cent companywide to cover future losses, compared with 5.3 per cent during the year-ago quarter.

- AP