JP Morgan Chase (NYSE: JPM) Q4 Earnings Surge On Investment Banking Strength, But Loan Losses Remain High

JP Morgan Chase (NYSE: JPM) announced Friday fourth quarter earnings jumped more than 400 percent as profits from its investment banking unit were robust.  However, the bank continued to face rising loan losses.

For the quarter, JP Morgan earned $3.3 billion or 74 cents a share, much higher than the $702 million or 6 cents a share posted in the fourth quarter of 2008.

JP Morgan’s investment banking unit was the main driver for fourth quarter profit growth, posting a $1.9 billion profit on revenue of $4.9 billion, with both figure being exorbitantly better than last year.  Equity underwriting fees saw the strongest growth, up 66 percent to $549 billion.

The bank’s total results in 2009 also improved drastically from the full year 2008.  Revenue totaled $108.6 billion, a record for the firm.  Earnings totaled $11.7 billion or $2.26 per share, up from $5.6 billion or $1.35 per share in the prior year.

Despite the massive increase in profits year over-year, JP Morgan CEO Jamie Dimon expressed that the results were not enough. “Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential,” stated Dimon.

One area that did not show much improvement for the bank in the fourth quarter was credit costs.  JP Morgan said it added $1.5 billion to consumer loan loss reserves, bumping total companywide credit reserves to $32.5 billion.

The bank said weak economic conditions and price declines continue to drive higher anticipated losses for its mortgage and home equity portfolios.  However, JP Morgan continues to work its loan modification efforts to minimize those losses and keep borrowers in their homes.

“We remain committed to helping homeowners meet the challenges of declining home prices and rising unemployment…During 2009 alone we offered approximately 600,000 new trial loan modifications to struggling homeowners. Of these, 89,000 loans have achieved permanent modification

JP Morgan provided more than $600 billion in new credit during 2009 to consumers, corporations, small businesses, municipalities and non-profits, which included more than 18 million card, home equity, mortgage, auto and education loans.

“Throughout this period of financial turbulence, our employees have never lost focus on what a bank should do – support and serve our 90 million customers and the communities in which we operate,” added Dimon.