J.P. Morgan Chase & Co., which last week agreed to buy Chicago-based Bank One Corp, on Wednesday posted a quarterly profit, compared with a year-ago loss, boosted by its investment bank and lower credit costs.
The No. 2 U.S. bank easily beat Wall Street estimates when it reported fourth-quarter net income of $1.86 billion, or 89 cents a share, compared with a net loss of $387 million, or 20 cents per share a year earlier.
Wall Street analysts had expected the company to earn 77 cents a share, according to estimates tallied by Reuters research.
“We had our best quarterly performance since the merger in Investment Management and Private Banking,” Chairman and Chief Executive Officer William Harrison said in a release.
In the year-ago quarter the bank took a $1.3 billion charge related mostly to its past dealings with the bankrupt energy company Enron Corp.
Driven by strong equity and debt underwriting, the company’s investment bank earned $860 million in the quarter, up from $341 million a year ago.
Underwriting stock sales brought in $254 million and reached the highest quarterly level in three years.
On the commercial credit side, costs dropped $753 million from a year earlier as credit quality improved, leaving the bank with fewer bad loans.
Net revenue rose 21 percent to $7.9 billion. Yet, total assets rose just 2 percent from a year ago to $771 billion and fell 3 percent from the third quarter.
J.P. Morgan shares traded on the New York Stock Exchange closed at $39.09 on Tuesday.
Last week the bank said it will buy retail banking rival Bank One in a merger that would quickly expand its branch network coverage to 13 new states in the Midwest and the Southwest.