JPMorgan reports hefty $3.6 billion profit
Filed under: Earnings, JP Morgan Chase
JPMorgan Chase (JPM), the first of the big U.S. banks to report third-quarter earnings, said Wednesday its loan losses are still high and are expected to remain that way for the foreseeable future, a troubling sign for the economy.While JPMorgan reported a $3.59 billion profit, it also says it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter.
"Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios," JPMorgan CEO Jamie Dimon said in a statement.
In its earnings statement, the bank also described the near-term path of the economy as uncertain.
Investors didn't seem troubled by the bank's dim outlook, and likely were more focused on the fact that big profits in divisions such as investment banking helped the New York-based bank earn 82 cents per share during the third quarter. Analysts forecast a profit of 52 cents per share.
The company's stock, which closed at $45.66 on Tuesday, was up at $47.35 in pre-opening trading Wednesday.
JPMorgan's loss provision to cover current and future home loan defaults jumped to $3.99 billion, while its provision for credit card losses surged to $4.97 billion.
Credit card defaults and mortgage losses are likely to continue to creep higher and lag an overall economic recovery. Losses on credit cards typically mirror unemployment, which rose to 9.8 percent in September.
Economists predict the U.S. jobless rate will eclipse 10 percent in the coming months.
JPMorgan's losses on credit cards has already passed 10 percent. The bank said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3 percent.
Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased the failed bank Washington Mutual a year ago.
In its earnings statement, the bank also described the near-term path of the economy as uncertain.
Investors didn't seem troubled by the bank's dim outlook, and likely were more focused on the fact that big profits in divisions such as investment banking helped the New York-based bank earn 82 cents per share during the third quarter. Analysts forecast a profit of 52 cents per share.
The company's stock, which closed at $45.66 on Tuesday, was up at $47.35 in pre-opening trading Wednesday.
JPMorgan's loss provision to cover current and future home loan defaults jumped to $3.99 billion, while its provision for credit card losses surged to $4.97 billion.
Credit card defaults and mortgage losses are likely to continue to creep higher and lag an overall economic recovery. Losses on credit cards typically mirror unemployment, which rose to 9.8 percent in September.
Economists predict the U.S. jobless rate will eclipse 10 percent in the coming months.
JPMorgan's losses on credit cards has already passed 10 percent. The bank said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3 percent.
Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased the failed bank Washington Mutual a year ago.
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Reader Comments (Page 1 of 2)
10-14-2009 @ 8:24AM
Glenn said...
If JPM is so concerned about credit card losses then why did they screw over customers with good credit ratings by changing the terms offered for consolidation loans after they were already made and lower those same customers' credit ratings ? These are the same Americans who had to bail their tails out last year and this is how they are repaid? Why would anyone deal with JPM when there are numerous credit unions and small local banks who value their customers ?
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10-14-2009 @ 8:51AM
Lisa said...
Your right. My mortgage is through Chase and this past April I applied to refinance my home to 1. lower my interest rate and 2. take some equity to pay off credit card balances. At the time Chase told me my husband and I should have no trouble refinancing since our credit score was good and my house was appraised for what we needed. As a matter of fact, the loan officer told me it would be a great idea for me to do this. Well, June comes along and Chase begins to cut all my credit lines in half, (I have no late payments and I always paid more than the miniumum payment) which now instead of me being at 40-50% debt ratio I'm now at 90%. Then Chase falls so far behind in the underwriting department that they tell me we can't close in the original 90 day period so now they have to run another credit report (because the old one had expired) and I'm sure you can guess what happened. Of course Chase says they're sorry and there is nothing that can be done, they're short on underwriters because they laid off so many workers and never expected to have the amount of refinances that came in. So now I'm out 750.00 for the application fee that they were more than happy to charge to my Chase card and I have a house with equity that I would like to re finance, to use the money to get out of debt but I can't refinance because of my fico score.
10-14-2009 @ 10:08AM
Ken said...
You are right. Why would anyone do business with these banks. The best thing that ever happened to me is when i purchased my 2005 dodge truck the dealer placed the loan with a local credit union. I have been dealing with them ever since. i had a chase card that i was paying on time and even paying more than they asked for. they raised the interest rate and kept cutting my credit limit as the balance went down. i have since gone back to my credit union taken out an equity loan and paid these cards off the rate I was given was less than 5% and they even offered me their master card with a 10,000 line of and an interest rate of less than 8%. I have not used this card as of yet but it will be the only active card in my wallet. I have not closed any of the other accounts but I did destroy the cards. I can not wait until things get better and these banks come back wanting to do business again. I will take pride in telling them all to go to hell!! I also have moved all my accounts to this credit union since I have told bank of America to sit on it and rotate.
10-14-2009 @ 2:04PM
Tami said...
You are so right. I have two loans with them and wanted to consolidate. They told me my scores were below 615, when my true fico scores are 665. It is the credit scoring system they use, but I was told my the loan officer the scores I paid for online must be fraudelant. Apparently your fico scores are worth nothing anymore. Beware.
10-14-2009 @ 8:34AM
Maggie said...
I am so happy for JPMC that they can still hold their heads high and proclaim financial victory while they walk over the bodies of their victims. It is very curious that the biggest bank claiming sainthood status in the foreclosure crisis, offering loan mods, DILs, etc., is the the most difficult one to work with in this area. Immovable, stoic even. I know, lets build a monument! Don't waste time investigating their buisiness practices, poor customer service and outright fraud in offering the aforesaid mortgages. As one who knows them well, too well, I say...GO ZIPPY!!!!!!!!
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10-14-2009 @ 9:18AM
necet said...
of course jpm has profits, they send jobs out of the country and fire good people so they don't have to give them a severance package. management doesn't care about their customers or employees. jpm should be investigated.
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10-14-2009 @ 9:30AM
jon brija said...
yep, and I wonder how much money they will be paying back the government??? POS banks, the biggest crooks and Obama is gonna let them do it all over agian. This isn't over by a long shot.
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10-14-2009 @ 9:18AM
FOXYLYNX said...
THE ONLY ONES MAKING MONEY ARE THE BANKS AND THE ONLY THING GROWING IN THE U.S. IS JOBLESS RATE AND THE GOV. WHAT THE HELL IS WRONG WITH THIS PICTURE.
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10-14-2009 @ 9:27AM
sgentilejr said...
No one is ever going to get out of debt, unless they stop blaming the banks and credit card companies and wake up and accept reality and admit to themselves that they are the problem and they are their own worse enemy.
The solution to getting out of debt is very simple___stop buying any and everything you cannot afford to pay for in cash at the time of purchase or unless you can repay the FULL credit card balance each month. YOU are not helping yourself in any way by giving a chunk of your income to creditors for interest payment and other fees. Only YOU can get yourself out of debt and only YOU can make the hard choices necessary to reduce YOUR spending.
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10-14-2009 @ 9:37AM
ajmm said...
I totally agree.
10-14-2009 @ 1:08PM
Iridium said...
You are 100% wrong. Many people have no choice but to go in debt because of medical bills and other unforeseen events.
When you have a $10,000 credit line with 9% interest and you have to use $5000 to pay for medical bills you end up with a payment that can be made.
When Chase decides to change your interest rate to 29% for no reason and now there is no way possible to pay your debt, THAT IS NOT THE PERSONS FAULT!!! That is the fault of the bank.
When your credit score drops because Chase cuts you credit limit even if you never even used the card and now you can't get a mortgage, THAT IS CHASE'S FAULT!!!.
Obviously you make so much money that you don't have to worry about finances. If you get sick and get a $5000 bill, you can just cover that.
There is nothing wrong with using credit as long as you use it responsibly. The fact is that the average 30 year old makes $5000 less a year adjusted for inflation that their parents did at 30. When you factor in the inflation of goods and services you find that real incomes for young people have never been lower. It is impossible for the average 30 year old to live even a quarter of the lifestyle enjoyed by his or her parents at the same age.
10-15-2009 @ 7:45AM
RJ said...
CHASE JP MORGAN BASICALLY SUCKS!!! I will never use any company or products associated with them. My Sony Chase card will never be used again and I will think twice before buying Sony products as they are affiliated with Chase Bank.
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10-14-2009 @ 10:03AM
jeff said...
JP/chase are scam artists!! they are crying in this article to hide the fact they and goldman/sachs used their FED and stopped credit to create this whole depression. WHY because they made BILLIONS by buying out bankrupt competitors and charging all kinds of fees and huge refinance costs!! I refinanced with a 800 credit rating and they charged me $3500 when 2 years ago the refinance cost was only $1000!! They are holding checking in my accounts before making the money available for 2 days and collecting interest on it and everyone else. They have upped credit card interest rates and their grace period only increased to 21 days because of the new law when it should be 30 days!! They own the FED and that is the whole problem since they can borrow at 0% but charge us over 5% for borrowing our own money!! GET RID OF THE FED and BIG BANK CONTROL of our country!!
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10-14-2009 @ 10:21AM
irfan said...
YES JPM SHOWES PROFIT CHARGING CUSTOMER OVER DRAFT FEES , BY MAKING WRONG INFO ON ACCOUNTS , THEY ARE THEFIS
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10-14-2009 @ 10:13AM
Ken said...
The only way we the people can send a message to these large banks that we are unhappy with the way we are being treated is to stop doing business with them. You will find out that it is better to deal with you small local bank and a credit union. These people know how to treat customers.
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10-14-2009 @ 1:45PM
Adriana said...
Something should be done, I agree. I send a letter to the new CEO( will never see a respond from him or Chase), I send a letter to the White house and I am willing to go in the front of any CHASE bank with a sign mentioning the way they do business and what crooked, dishonest executives they have.
They are the right terrorists not the once we go after!
10-14-2009 @ 10:15AM
Ken said...
Lisa.
Take your same refinance plan to a credit union in your area they will be more than happy to do business with you.
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10-14-2009 @ 11:10AM
Lisa said...
Thanks, I will look into that.
10-14-2009 @ 10:22AM
Paul said...
Today The Government and Wall street will Twiddle the Numbers again with absolutely Nothing to support them. Banks are reporting Profits Only because they are still Playing Numbers with Bailout Money. They are Not actualy making money. Alcoa, Philips, Intel and the rest are All Twiddling the Numbers With Nothing to support them. Layoffs, Benefit Cuts, and Restructuring are whats going on here just to make the numbers look good. The Real Truth is, the Average Income earner will Not benefit from investing in the Stock market. Less than 10 Percent do and then they are either Lucky or they are in tune with their Broker and are watching thier investments 24 hours a day on a Computer. Yes, you Must be a Slave to your Computer to even have a chance to be in the 10 Percent. 90 percent Lose their investments. If you really want to throw your Money away take a trip to Vegas or go to the Horse track. At least you might have a little fun while you break the bank
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10-14-2009 @ 10:27AM
philip said...
that normal for chase to do good. because they are a blood sucker and a financial killer and a national destruction.
i have a loan mortgage with then for 451.000 dollars
the house value only 200.000 dollars.
the house was on forclosed pay off only 273.000 dollars with a large down payment of 38.000 dollars untill now i have no closing statement even i requested 5 time.
PLS. can anyone explain what kind the business entity is chase bank.
philip
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