In the finance sector's first major earnings release for third-quarter 2010, JPMorgan Chase & Co. (JPM) on Wednesday reported earnings per share of $1.01, handily beating analysts' expectations for EPS of $0.89.
In its Q3 2010 release JPMorgan, which also reported a 23% rise in profits to $4.4 billion versus $3.6 billion in Q3 2009, attributed its strong quarterly earnings performance to solid business results and reduced credit costs.
Revenue dropped 15%, however, to $24.3 billion from $28.8 billion at the same period from a year ago, and Chase's retail business saw a 19% drop in net income as it struggled to resolve thousands of mortgages with documentation problems.
Dimon Cites Good Underlying Performance but Continuing High Net Charge-Offs
"Our third-quarter net income of $4.4 billion was the result of the good underlying performance of our businesses," said Chairman and CEO Jamie Dimon in a statement. "We are pleased to report a continued overall decline in credit costs, although our mortgage and credit card portfolios continued to bear very high net charge-offs. Our mortgage delinquency trends remained relatively flat compared with the prior quarter, and we expect mortgage credit losses to remain at these high levels for the next several quarters."
Dimon
warned that if economic conditions worsen, mortgage credit losses could trend higher, but he added that the bank expected credit card net charge-offs to continue to improve next quarter. JPMorgan reduced loan loss reserves by $1.5 billion in Q3 as estimated losses declined.
As for individual business lines, asset management saw net inflows of $38 billion and added over 300 client advisors and brokers. Commercial banking reported record quarterly revenue of $471 million, an increase of $130 million, or 38%, from a year ago, partly due to the purchase of a $3.5 billion loan portfolio. The investment bank's net income was $1.3 billion, down 33% compared with the prior year and 7% compared with Q2 2010.
