Chase Profit Soars – But Mortgage, Credit Card Losses Mount
JPMorgan Chase reported today fourth quarter profit of $3.3 billion, or 74 cents a share, compared with $702 million, or 6 cents a share a year earlier, beating most analysts expectations. For 2009, Chase reported net income of $11.7 billion, or $2.26 per share, on record revenue of $108.6 billion.
However, the bank’s mortgage and credit card businesses were hit with big losses that were offset by record investment banking revenue. The provision for credit losses was $4.2 billion, an increase of $653 million from the prior year and $241 million from the prior quarter. The provision included an addition of $1.5 billion to the allowance for loan losses, compared with additions of $1.9 billion in the prior year and $1.4 billion in the prior quarter.
Loan loss reserves in Chase’s commercial banking unit increased to $494 million from $190 million. Prime mortgage net charge-offs – loans the bank does not expect to be repaid – increased significantly to $568 million, or 3.81%, from $195 million, or 1.2%, a year earlier. Branch sales of credit cards decreased 31% from the prior year and 6% from the prior quarter.
