J.P Morgan profit soars

J.P. Morgan Chase & Co said quarterly profit rocketed to $3.6 billion, topping Wall Street expectations, as stock underwriting and bond trading revenue surged. The second-largest US bank said its dividend could rise early next year. But Chief Financial Officer Mike Cavanagh also sounded notes of caution on a call with journalists, saying the company needs to see more signs of economic stabilisation before it sets aside less money to cover loan losses.
Its shares rose 4.4 percent in premarket trading to $47.65. J.P. Morgan posted third-quarter net income of 82 cents a share, compared with $527 million, or 9 cents a share, in the same quarter last year. "In this environment, this is a championship performance," said Mike Holland, president of Holland & Co in New York.
Analysts on average had forecast earnings of 52 cents a share, according to Thomson Reuters I/B/E/S. Credit costs climbed as the bank added $2 billion to its reserves against future losses on consumer and other loans, bringing total reserves to $31.5 billion.
Loan losses jumped and the bank reported $7 billion in net charge-offs on consumer loans on its books and in securitisation vehicles, up from $3.3 billion a year earlier. "While we are seeing some initial signs of consumer credit stability, we are not yet certain that this trend will continue," Chief Executive Jamie Dimon said in a statement.
The investment bank reported net income of $1.9 billion, compared with $882 million a year earlier. The unit posted a gain of $400 million on leveraged loans and mortgage-related securities that had a $3.6 billion writedown in the year-earlier quarter.
Trading gains lifted fixed income markets revenues to an eye-popping $5 billion, up from $800 million a year earlier. Stock underwriting revenue rose 31 percent to $681 million. There was a different picture at the bank's credit card business, which reported a $700 million loss, compared with a profit off $292 million a year earlier.
Investors will be watching for J.P. Morgan, which has remained among the healthiest US lenders during the financial crisis, to raise its dividend. The bank cut the quarterly dividend to 5 cents a share from 38 cents in February. J.P. Morgan CFO Cavanagh said the bank could boost its annual per-share dividend to around 75 cents or $1 early next year, "if we're lucky."