Find the best credit card offers online.Despite expectations of most analysts, JPMorgan Chase recently announced a fourth quarter profit amounting to $3.3 billion. That translates to $0.74 per share. A year earlier, the company posted fourth quarter profits of $702 billion which amounted to $0.06 per share.
The company posted a net income of $11.7 billion for the year 2009 on record revenue amounting to $108.6 billion. The 2009 net income of the company amounts to $2.26 a share.
However, this impressive earning performance of JPMorgan Chase was not enough to impress investors. JPMorgan Chase shares showed a drop during the early trading period. Investors are expressing concern over the mortgage and commercial loan division’s losses that the bank has weathered. They are also worried about this continuing problem of credit card delinquencies which may mean a precarious climate for the bank in 2010, despite JPMorgan Chase being among the better managed bank in the U.S.
Jamie Dimon, CEO of JPMorgan Chase said, “Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential”. He also said that JPMorgan Chase was benefited by its diverse leading franchises. The bank is seeing strong earnings from its Retail Banking, Commercial Banking, Investment Bank and Asset Management franchises.
While earnings from its other divisions were impressive, JPMorgan Chase’s credit card and mortgage business got hit hard, seeing huge losses which were, however offset by the company’s record revenue from investment banking. Credit losses provision for the company was $4.2 billion. This increased from the previous year by $653 million and previous quarter by $241 million. Included in this provision is an additional allowance of $1.5 billion for loan losses. During the previous year, addition for loan losses was $1.9 billion and, for the previous quarter, it was $1.4 billion.
The company blames weak economic conditions and a decline in the price of housing for the higher estimated losses for their home equity and mortgage portfolios.
For its commercial banking unit, the company’s loan losses went up to $494 million from $190 million. Charge offs for prime mortgage went up to $568 million, equivalent to an increase of 3.81%. During the previous year, the company’s prime mortgage net charge off was $195 million, equivalent to 1.2%. Credit card branch sales for JPMorgan Chase also dropped by 31% compared to the previous year and 6% compared to the previous quarter.
Dimon said that, although the company is seeing delinquencies begin to stabilize, costs of consumer credit still remains high. Employment is also weak and home prices continue as they were before. The company therefore remains cautious, he said.
