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J.P. Morgan quarterly profit up 38 percent

J.P. Morgan Chase & Co., which has agreed to buy Chicago-based Bank One Corp., on Wednesday said quarterly earnings rose 38 percent, driven by higher profits from its investment banking and capital markets businesses.
/ Source: Reuters

J.P. Morgan Chase & Co. on Wednesday said quarterly earnings rose 38 percent, as higher profits from investment banking and fewer bad loans offset a decline in its mortgage business.

The New York-based bank, which is in the process of buying rival Bank One Corp. reported first-quarter net income of $1.93 billion, or 92 cents a share, compared with $1.40 billion, or 69 cents per share.

That exceeded the average estimate of 87 cents per share from Wall Street analysts polled by Reuters Research.

“It was a very good quarter for them,” said Tim Ghriskey, at Ghriskey Capital Partners LLC. “This is driven by strong financial markets, and we’ve seen the trend throughout the industry.”

Profits were the highest since the bank was formed four years ago, when Chase Manhattan Corp.’s acquired J.P. Morgan & Co. Like its rivals, J.P. Morgan has benefited from a strong fixed income market and a rebound in equity markets and mergers and acquisitions business.

Net revenue rose 7 percent, to $8.98 billion. Total assets grew 6 percent from a year ago, to $801.1 billion.

The division that includes securities underwriting and other investment banking businesses had earnings of $1.11 billion, or 24 percent over the same quarter last year and 29 percent more than the fourth quarter of 2003.

The quality of its commercial loan portfolio also improved, a welcome trend after the bank stomached a series of large write-offs for bad loans in recent years. Commercial net charge-offs for the quarter were $102 million compared with $292 million a year earlier.

Performance of its private equity unit continued to rebound from a period of steady losses from investments made during the late 1990s technology bubble.

The division, J.P. Morgan Partners, had $115 million of earnings, compared to a loss of $223 million last year.

In a statement, Chief Executive William Harrison said the company is still on target for a mid-year closing of its acquisition of Chicago-based retail bank Bank One.

The $55 billion acquisition would expand its branch network coverage to 13 more states in the Midwest and Southwest and create a bank with $1.08 trillion in assets.