JP Morgan quarterly profit cut
(20 October 2008 – USA) JP Morgan Chase reported a third quarter net income of US$527 million (A$805 million), hit significantly by credit losses and the Washington Mutual acquisition.
The quarterly net income was an 85 percent fall compared with net income of US$3.4 billion in the third quarter of 2007.
The bank incurred US$3.6 billion in write-downs and US$640 million in losses from last month's acquisition of Washington Mutual.
Jamie Dimon, chairman and chief executive officer said that the fall in income was driven by markdowns and higher credit costs due to continued deterioration in the home-lending portfolio.
DImon said, however, that the bank has seen organic growth, including in Investment Banking market share, net flows in Asset Management and increased loan and liability balances in Commercial Banking and Treasury & Securities Services.
In the investment banking division, net income was US$882 million, an increase of $586 million from the prior year, reflecting an increase in net revenue and tax benefits.
In retail financial services, net income was US$247 million, a decrease of US$392 million, or 61 percent, reflecting a significant increase in the provision for credit losses in regional banking and higher noninterest expense in mortgage banking. These factors were offset partially by revenue growth in all businesses.
For cards, net income was US$292 million, a decline of US$494 million, or 63 percent, from the prior year. The decrease was driven by a higher provision for credit losses, partially offset by lower noninterest expense.
In Commercial Banking, net income was US$312 million, an increase of US$54 million, or 21 percent, from the prior year, driven by record net revenue, partially offset by an increase in the provision for credit losses and higher noninterest expense.
The bank incurred US$3.6 billion in write-downs and US$640 million in losses from last month's acquisition of Washington Mutual.
Jamie Dimon, chairman and chief executive officer said that the fall in income was driven by markdowns and higher credit costs due to continued deterioration in the home-lending portfolio.
DImon said, however, that the bank has seen organic growth, including in Investment Banking market share, net flows in Asset Management and increased loan and liability balances in Commercial Banking and Treasury & Securities Services.
In the investment banking division, net income was US$882 million, an increase of $586 million from the prior year, reflecting an increase in net revenue and tax benefits.
In retail financial services, net income was US$247 million, a decrease of US$392 million, or 61 percent, reflecting a significant increase in the provision for credit losses in regional banking and higher noninterest expense in mortgage banking. These factors were offset partially by revenue growth in all businesses.
For cards, net income was US$292 million, a decline of US$494 million, or 63 percent, from the prior year. The decrease was driven by a higher provision for credit losses, partially offset by lower noninterest expense.
In Commercial Banking, net income was US$312 million, an increase of US$54 million, or 21 percent, from the prior year, driven by record net revenue, partially offset by an increase in the provision for credit losses and higher noninterest expense.
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