JPMorgan Chase & Co. reported a 67 percent jump in first-quarter earnings Wednesday on solid growth in investment banking fees and a drop in losses from credit cards. The bank's mortgage business continued to be weak.
The New York bank earned $5.6 billion, or $1.28 per share, compared with $3.3 billion, or 74 cents a share in the same period last year. The profits at JPMorgan, the first bank to report earnings, were way ahead of the $1.15 per share analysts surveyed by FactSet were expecting.
Revenue fell to $25.2 billion from $27.7 billion in the same period last year. JPMorgan is the nation's second-largest bank after Bank of America Corp. as measured by assets.
The slump in real estate continued to weigh heavily on JPMorgan's results. The bank increased its provision for mortgage-related losses by $1.1 billion.
Jamie Dimon, the CEO of JPMorgan, said in a statement that the bank's mortgage losses were "extraordinarily high," adding: "Unfortunately, these losses will continue for a while."
In a conference call with reporters, Dimon said he expects that JPMorgan and other banks will pay more fees and penalties after an investigation by the attorneys general of all 50 states is finished. The attorneys general are looking into allegations that the banks bungled foreclosure proceedings.
JPMorgan Chase & Co.'s profits included $2 billion from reducing its credit card loan reserves. Delinquency fell among the bank's credit card customers, allowing JPMorgan to lower its estimates of future losses.
Investment banking revenue fell to $8.2 billion from $8.3 billion in the prior year. However, much of the profits were generated from a 23 percent increase in investment banking fees to $1.8 billion. That included record debt underwriting fees of $971 million, up 33 percent from the prior year, and a 41 percent increase in advisory fees to $429 million.
The portion of JPMorgan's customers who were late by 30 days on their mortgage payments fell to 6.2 percent, compared with 7.3 percent a year earlier. However, its home equity loan portfolio had losses of $720 million, while its sub-prime mortgage losses were $186 million.
In the quarter, the bank lost $1.1 billion from increased costs to service mortgages, an expense of $650 million due to costs from foreclosures and mortgage repurchase losses of $420 million.
JPMorgan's chief financial officer, Douglas Braunstein, said medium-size businesses were also showing signs of growth. Speaking on a conference call with analysts, Braunstein said the average loan balances for midsize companies are up 13 percent from a year ago. He also said companies tapped into their lines of credit for the first time in several quarters.