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JPMorgan Chase books $3.3 billion profit

JPMorgan Chase reported better-than-expected profits of $3.3 billion in the 4th quarter Friday, helped by healthy results from its investment banking business.

The New York City-based banking giant also revealed that compensation expenses climbed 18% during the year to $26.9 billion.

Kicking off the fourth quarter earnings season for the nation's top banks, the company said it earned 74 cents on a per share basis during the final three months of 2009.

That was much better than Wall Street was anticipating. Analysts polled by Thomson Reuters expected the company to report a profit of $2.46 billion for the quarter, or 61 cents a share.

Shares of JPMorgan Chase (JPM, Fortune 500) fell about 1% in early morning trading though as revenue numbers fell short of expectations.



"Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm's earnings potential," JPMorgan Chase CEO Jamie Dimon said in a statement.

Still, 2009 was a stellar year for the bank, as profits more than doubled to $11.73 billion, besting consensus estimates.

One of the strongest divisions in the quarter was the company's investment banking business, which earned a profit of $1.9 billion in the quarter, largely helped by robust debt and stock underwriting fees.

There were also some encouraging signs within the company's massive loan portfolio. The number of non-performing assets, or loans that are not collecting interest or principal payments, declined from the third quarter, suggesting that loan losses may have peaked.

With American consumers and the nation's housing market still under pressure though, the company said it added an additional $1.9 billion to its loan loss reserve in the fourth quarter.

Dimon acknowledged the continued weakness in the economy and said that the bank remained cautious as it moved into 2010.

"While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist," he said.

JPMorgan Chase is the first of several big banks and Wall Street firms to report its latest results. Next week, Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) will all release their fourth-quarter and full year numbers.

JPMorgan Chase is widely believed to be among the strongest banks in this group though, and its healthy profits could lead to more criticism of the financial services industry. The White House proposed a new tax Thursday on big banks that it said helped to contribute to the financial crisis.

There is also a growing backlash among politicians and taxpayers about the size of bonuses doled out by financial firms that benefited from government bailouts.

JPMorgan, which accepted $25 billion in taxpayer aid last fall, revealed Friday that more than a third of its compensation expenses were tied to its Wall Street business. The company spent $9.33 billion to compensate employees in its investment banking division, an increase of $1.6 billion from a year ago. That figure includes salaries as well as money set aside for bonuses.

Divided among the nearly 25,000 individuals in this business, the average annual compensation per employee was nearly $380,000.

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JPMorgan profits surge six fold
Banking giant enjoy rebound in key areas such as investment banking even as consumer credit issues persist.

JPMorgan Chase's profits increased more than six fold in the latest quarter, the company said Wednesday, allowing the bank to handily beat Wall Street estimates.

Delivering its results before the opening bell, the New York-based bank said that it earned $3.6 billion during the third quarter, or 82 cents a share.

During the same period a year ago, when the company was grappling with massive writedowns, JPMorgan earned just $527 million, or 11 cents a share.

The latest results easily beat Wall Street expectations. Analysts were anticipating the company to report a profit of $2.03 billion for the quarter, or 52 cents a share, according to Thomson Reuters.

JPMorgan Chase (JPM, Fortune 500) shares gained 3% at the start of trading Wednesday.

The firm's investment banking business was one particularly bright spot in the latest quarter as profit within the division climbed to $1.9 billion, more than double what it was a year ago. Much of that was driven by a strong performance in its fixed income division.

Company CEO Jamie Dimon, who has been lauded for his efforts leading the company, acknowledged the firm's "strong earnings power." But he cautioned that the company continues to face challenges, particularly within its consumer-related divisions such as its credit card business.

"While we are seeing some initial signs of consumer credit stability, we are not yet certain that this trend will continue," he said in a statement.

During the quarter, the company said it added approximately another $2 billion to its consumer credit reserves, which dragged down results both within its mortgage lending and credit card businesses.

Both divisions reported widening losses compared to the second quarter of 2009.

Mike Cavanagh, JPMorgan Chase's chief financial officer, tempered that view however, noting that there were some encouraging signs such as stabilization of early-stage delinquencies within its credit card portfolio.

He added that the company could be close to the end of adding to its loan loss reserves if the economy continues to stabilize.

Cavanaugh also delivered some encouraging news for shareholders, noting that a dividend hike was a possibility, provided that the U.S. economy doesn't endure further weakness from here.

Earlier this year, JPMorgan Chase slashed its annual dividend nearly 87% to 20 cents a share to preserve capital. Cavanaugh suggested it may not be long before the board could raise it to 75 cents or $1 a share.

"If we are lucky that could be some time early next year," he said.

Other top-tier financial firms are slated to report their quarterly results later this week, with Citigroup (C, Fortune 500) slated to report its results Thursday and Bank of America (BAC, Fortune 500) due up Friday.