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JP Morgan's profits hold steady JP Morgan's profits hold steady
(30 minutes later)
JP Morgan Chase has reported profits of $3.3bn (£2.1bn) for the first quarter.JP Morgan Chase has reported profits of $3.3bn (£2.1bn) for the first quarter.
The Wall Street bank's net income was identical to the amount it earned in the previous quarter, and up 55% from the first quarter of 2009.The Wall Street bank's net income was identical to the amount it earned in the previous quarter, and up 55% from the first quarter of 2009.
The main driver was the bank's debt trading business, which produced revenues of $5.5bn.The main driver was the bank's debt trading business, which produced revenues of $5.5bn.
The bank also increased the cash it holds against possible losses from lawsuits by $2.3bn, as clients it sold mortgages to threaten legal action.The bank also increased the cash it holds against possible losses from lawsuits by $2.3bn, as clients it sold mortgages to threaten legal action.
The bank also reported improvements in the repayment behaviour of consumers it has lent money to, and reduced the amount of cash it has to hold in reserve against possible losses on credit cards by $1bn. The results, which were announced before New York markets opened, were better than expected, causing European bank stocks to jump, with Barclays up 2.5% and Credit Suisse up 1.6%.
However the results suggest there is still no end in sight to losses in the mortgage business, as the bank increased its reserves against defaults on home loans by $1.2bn. JP Morgan's results were driven by its fixed income division, which is responsible for bond trading and credit derivatives.
Moreover, like many other banks, JP Morgan faces the risk that it could be sued by investors who have lost money on mortgages that the bank sold to them prior to the financial crisis. Like the stock markets, bond markets have rebounded over the last twelve months. Moreover, the difference between the prices that dealers like JP Morgan buy and sell bonds for remains higher than prior to the financial crisis.
Other divisions that the bank said had done well included asset management, commercial banking and retail banking.
However, JP Morgan's chief executive said: "Unfortunately, these good results were partially offset by high losses in the consumer credit portfolios."
Despite continuing to lose money on loans it has made to consumers, the bank said that the rate of non-payments by consumers was improving, and it had reduced the amount of cash it holds in reserve against future losses on credit cards by $1bn.
Mortgage woes
The results suggest there is still no end in sight to losses in the mortgage business, as the bank increased its reserves against defaults on home loans by $1.2bn.
Moreover, like many other banks, JP Morgan faces the risk that it could be sued by investors who have lost money on mortgages the bank sold to them prior to the financial crisis.
JP Morgan specifically noted that the $2.3bn increase in reserves against litigation included "those for mortgage-related matters".JP Morgan specifically noted that the $2.3bn increase in reserves against litigation included "those for mortgage-related matters".