J.P. Morgan Chase & Co. (JPM) reported a $3.3 billion profit in the fourth quarter of 2009. And while that was 9% less than what it reported from the third quarter, it beat analyst expectations.
Analysts noted that the earnings report reflected a clean quarter almost free of one-time items.
After a week that included a grilling in front of the Financial Crisis Inquiry Commission in Washington D.C., big banks now have to disclose fourth quarter earnings that in the case of J.P. Morgan Chase, show profits that remain solidly tied to its business with Wall Street.
On the positive side, J.P. Morgan managed to hold on to its solid profit from securities underwriting, trading, and financial advice to big companies; investment banking earnings of $1.9 billion recovered from a $2.4 billion loss a year earlier and were flat with the strong third quarter, despite a 34% decline in revenue.
But shares fell 1.9% premarket to $43.85, partly as a reflection of concern over continued losses in its retail banking and credit-card lending businesses.
Chairman and Chief Executive James Dimon said results for the quarter and year “fell short of both an adequate return on capital and the firm’s earnings potential.”
Dimon acknowledged that the bank is continuing to struggle with delinquent loans.
“While we are seeing some stability in delinquencies, consumer-credit costs remain high, and weak employment and home prices persist,” Mr. Dimon said. “Accordingly, we remain cautious.”
To that end, Dimon remarked that the bank added $2 billion to the reserve for future loan losses, virtually the same amount as in the third quarter.
The stock had gained 7.3% this month through Thursday, and had gained 84% the past year.
J.P. Morgan, the first of the major banks to report results, didn’t post a loss during the recession, even as other major banks were pushed far into the red. The bank has impressed Wall Street with its low level of delinquent business loans and supercharged profits from securities underwriting.
For the quarter ended Dec. 31, J.P. Morgan posted a profit of 74 cents a share, up from 6 cents a year earlier. The year-earlier quarter included $1.1 billion in gains related to its 2008 acquisition of Washington Mutual and another $853 million in hedging gains.
Revenue on a managed basis, which excludes the impact of credit-card securitizations and is on a tax-equivalent basis, jumped 32% to $25.23 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 61 cents a share on $26.81 billion in revenue.
The company’s investment-banking division swung to a $1.9 billion profit from a year-earlier $2.36 billion loss.
Managed credit-loss provisions were $8.9 billion, up from $8.54 billion a year earlier and down from $9.8 billion the previous quarter.
