JPMorgan Chase profit soars on market rally

NEW YORK -- JPMorgan Chase & Co. said Friday it earned $3.28 billion in the last three months of 2009, extending a winning streak for big U.S. banks.

The banking giant said its investment banking and asset management businesses continued to profit from the 10-month market rally, allowing it to more than overcome the losses from consumers' continuing defaults on a variety of loans. The bank's performance continued the pattern set last year by most of the big national banks.

Record-low interest rates have allowed companies to profit when lending money at higher rates, while the boom in the financial markets have brought in billions of dollars in trading and underwriting revenue.

The market rally also allowed JPMorgan to give big bonuses to its employees. Compensation costs, which include salaries, bonuses and benefits rose 18 percent in 2009, although the company cut its work force by 1 percent during the year.

JPMorgan Chase earned 74 cents per share, easily topping analysts expectations of 61 cents, according to Thomson Reuters.

The bank's total revenue fell below expectations, however, and the company's stock fell 78 cents to $43.91 in premarket trading.

The bank generated $25.24 billion in revenue on a managed basis, which excludes certain items such as the effect of packaging and selling pools of credit card debt. Analysts predicted JPMorgan Chase would generate $26.8 billion in revenue.

Investors might also have reacted in premarket trading to the bank's decision to leave its quarterly dividend unchanged at its current 5 cents per share. When JPMorgan announced third-quarter results in October, bank executives said they would consider raising the dividend when loan losses stabilize and the company's credit costs fall.

Leaving the dividend unchanged could have investors worried the bank is still uncertain about when loan defaults will start to moderate and how big an impact that might have on 2010 earnings.

During the fourth quarter, JPMorgan set aside $7.28 billion for loan losses, essentially the same as it did during the quarter a year earlier, but 10 percent lower than the third quarter.

Nearly all banks have struggled with mounting loan losses as more customers fall behind in repaying loans while unemployment remains high. Unemployment remained at 10 percent in December.

JPMorgan earned $1.9 billion in its investment banking division, while its asset management division generated $424 million in net income.

For the full year, JPMorgan earned $11.7 billion, or $2.26 per share on record managed revenue of $108.6 billion. The bank earned $5.6 billion, or $1.35 per share in 2008.