JPMorgan offers more signs of banking rebound

Thursday, April 16, 2009 at 9:41 PM Posted by Beijing News


JPMorgan Chase on Thursday reported a net profit of 2.1 billion dollars in the first quarter of 2009, offering more hope for a recovery in a banking sector battered by a housing and credit crisis.

The firm, which has emerged as one of the biggest survivors of the banking sector meltdown of 2008, said profits fell 10 percent from the same period in 2008, but better than most market analysts had predicted.

The group reported profit per share of 40 cents, well above the 32 cents per share expected by analysts.

Revenues jumped 50 percent from a year earlier to 26.9 billion dollars.

"These numbers are very impressive in today's economy," said Jon Ogg, analyst at 24/7 Wall Street.

Chairman and chief executive Jamie Dimon said the company was expanding its lending but also digging in for a possible deepening of the economic crisis by boosting its capital and reserves for potential losses.

"We remain focused on capital and balance sheet strength," Dimon said in a statement.

"These levels of capital and reserves, combined with our significant pre-provision earnings power, enable us to withstand an even worse economic scenario than we face today."

The earnings report, on the heels of an upbeat profit release from fellow US bank Goldman Sachs, offered more evidence that the banking sector -- which has been aided by massive injections of US government capital and other aid -- is slowly regaining its health.

Last week, Wells Fargo projected a "record" three-billion-dollar profit in the first quarter, fueling optimism about the sector that began when Citigroup said is sees a return to profitability in early 2009 after punishing losses last year.

Citigroup is to reveal its first-quarter results on Friday.

"The banks are benefiting from a jump in mortgage refinancing as well as the fact that with interest rates so low, they are able to borrow cheaply and therefore profit more from lending," said John Wilson at Morgan Keegan.

"It ought to be difficult for a bank not to make money in this environment."

JPMorgan, which acquired Wall Street giant Bear Stearns in 2008 as it neared collapse and then scooped up Washington Mutual after the deepening of the financial crisis forced the giant thrift into bankruptcy, said it was girding for a rocky road despite the relatively strong profit.

This includes a massive increase in provisions for loan losses to 10 billion dollars, including from possible defaults on home loans and credit card debt.

"It is reasonable to expect additional increases to credit reserves if the economic environment worsens," Dimon said.

"Yet, we are confident that even a highly adverse economic scenario would not compromise our overall strength and stability -- or our ability to enhance our franchises. We remain well-positioned to benefit when the economy recovers."

Meanwhile a Rasmussen poll showed 48 percent of Americans at least somewhat confident in the stability of the banking system, up from 39 percent in early February.



Dancers from Ensemble of the Turkish state opera and ballet perform the play "Rose Garden" during the Skopje Dance Festival. AFP/Robert Atanasovski

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