NEW YORK — JPMorgan Chase, the third-biggest U.S. bank, said the credit-market crisis is almost over after it reported a 50 percent drop in first-quarter profits on $5.1 billion of write-downs and provisions.
JPMorgan shares rose 6.7 percent in New York trading after the losses from home-equity loans, financing for leveraged buyouts and subprime mortgages were smaller than analysts predicted and revenue exceeded expectations. Net income dropped to $2.37 billion, or 68 cents a share, matching estimates, the New York-based company said Wednesday in a statement.
“In this environment, being able to post earnings as they did is, I think, all-in good news,” Charles Bobrinskoy, vice chairman of Ariel Capital Management LLC in Chicago, told Bloomberg Television.
Ariel owned more than 611,000 JPMorgan shares as of Dec. 31.
JPMorgan, which has posted about $10 billion in write- downs and losses since the beginning of last year, is grappling with a sagging labor market that has hurt clients’ ability to pay credit cards and consumer loans on time. The company set aside $1.1 billion in the first three months of 2008 for future home-equity loan defaults, after boosting those provisions by $395 million in the fourth quarter.
Chief executive Jamie Dimon, 52, said on a conference call with reporters that the credit-market crisis is more than halfway finished as financial firms reduce leverage. It may be as much as 80 percent over, he said.
Profits declined from $4.79 billion, or $1.34 a share, in the same quarter a year earlier. Earnings matched the average estimate of 15 analysts surveyed by Bloomberg and beat Thomson Financial’s survey by 4 cents a share. Revenue fell 11 percent to $16.9 billion, compared with the average estimate of $16.8 billion in a Bloomberg survey.
JPMorgan’s investment- banking division lost $87 million in the first quarter, compared with profits of $1.5 billion in the year-earlier period. Revenue from that business fell by half as JPMorgan marked down $1.1 billion of leveraged loans and $1.2 billion of mortgage-related securities.
