JPMorgan Chase 4Q: Mortgage Business Soars, Credit Losses Plunge

JPMorgan Chase 4Q: Mortgage Business Soars, Credit Losses PlungeOn the strength of a soaring mortgage business and declining provisions for credit losses, JPMorgan Chase reported an increase of $5.69 billion for the fourth quarter, a 53 percent increase compared to a year earlier.
Mortgage production revenue, excluding losses on the repurchase of loans, was $1.6 billion, an increase of $543 million, or 51 percent, from the prior year.
The results reflect “wider margins, driven by favorable market conditions, and higher volumes due to historically low interest rates and the Home Affordable Refinance Programs (“HARP”).”
HARP, the widely expanded Obama Administration program to assist under “underwater” borrowers accounted for more than a quarter of refinancing nationwide across all lenders.
Meanwhile, JPMorgan’s credit card sales volume was up 9 percent, while charge-off rates remained at historic lows.
The bank’s provision for credit losses plunged 70 percent to $656 million.
CEO Jamie Dimon added: “The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover. As a result, we reduced the related allowance for credit losses by $700 million in the fourth quarter and we are likely to continue to see reductions in the allowance as the environment improves.”
Despite the strong quarter, Dimon’s pay was cut in 2012, mostly the result of the $6 billion London trade loss out of JPMorgan’s Chief Investment Office last spring. The trade in the bank’s credit derivatives portfolio became too big for the company to unwind without huge losses.
“As chief executive officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses in the Chief Investment Office,” the bank said in the filing.
Dimon’s pay for 2012 was $11.5 million, JPMorgan said in a filing with the Securities and Exchange Commission, including a salary of $1.5 million and a bonus of $10 million. In 2011, Dimon was paid $23.1 million, including the same salary and a bonus of $21.5 million.

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