JPMorgan Chase, the nation’s largest bank by assets and top credit card issuer, saw its profit drop 23 percent in the fourth quarter, mainly from falling trading and investment bank revenue.
But its loan business, particularly credit cards and small business lending, continues to rebound as credit losses decline.
JPMorgan’s net income dropped to $3.73 billion, or 90 cents a share, from $4.83 billion, or $1.12, in the fourth quarter of 2010, the New York-based bank reported today. Earnings either matched or were slightly short of Wall Street expectations.
Volatile stock and bond markets – fueled by Europe’s debt crisis – hurt JPMorgan’s investment banking business. Fees dropped 39 percent to $1.1 billion. Debt underwriting declined 40 percent, and stock underwriting plummeted 65 percent.
JPMorgan’s net income for 2011 was a record $19 billion, 9 percent higher than in 2010. Revenue for 2011 decreased 5 percent to $97.2 billion, and revenue for the fourth quarter fell 18 percent, to $21.5 billion, the lowest in three years.
JPMorgan’s lending business continued to improve in both volume and quality
Credit card sales volume was up 10 percent for 2011, while loan losses improved significantly.
Net loan charge-offs were $2.9 billion in the fourth quarter, down 43 percent compared with the prior year, and nonperforming assets declined by 33 percent.
Mortgage net charge-offs and delinquencies modestly improved, but both remained at elevated levels. JPMorgan’s credit card portfolio saw its net charge-off rate improve to 3.93 percent, down from 4.34 percent in the prior quarter and 7.08 percent in the prior year.
JPMorgan provided more than $17 billion of credit2 to U.S. small businesses in 2011, up 52 percent over prior year. It provided new credit cards to 8.5 million people and originated more than 765,000 mortgages.
The lender has offered more than 1.2 million mortgage modifications – the lowering of monthly payments for borrowers potentially facing foreclosure – since 2009, of which 452,000 were completed.
JPMorgan CEO Jaime Dimon said:
“As the economy continues to recover, we are gratified to see signs of improvement in loan demand and credit quality. Commercial Banking had its sixth consecutive quarter of loan growth, including a 17% increase in middle-market loans over the prior year. In Treasury & Securities Services, trade loans were up 73% over the prior year. Business Banking loans were up 5% over the prior year reflecting a 24% increase in origination volume during 2011. Mortgage originations through the Firm’s retail channel were strong. Finally, the Card business had continued loan growth in the fourth quarter as the Chase credit card portfolio ended the year with outstandings of $120.0 billion.”