NEW YORK — JPMorgan Chase & Co.’s $3.28 billion profit report carried a sobering message: Consumers are still struggling to pay off their loans, posing a threat to a strong economic recovery.
Even as the bank reported Friday its earnings more than quadrupled from $702 million during the final three months of 2009, JPMorgan said it’s not finished setting aside money to cover failed loans. In other words, it expects many more consumers to default on mortgages and other loans.
JPMorgan is the first of the big banks to announce fourth-quarter earnings. Its profits came from investment banking and asset management, businesses that have boomed as Wall Street remains far ahead of Main Street.
JPMorgan said it’s uncertain about the timing of a possible rebound, repeating a warning it has now issued for several quarters. CEO Jamie Dimon was blunt during a conference call with analysts, saying, “We don’t know when the recovery is.”
There’s “a lot of fog as to when business will return to normal,” said Alan Gayle, senior investment strategist for RidgeWorth Investments.
JPMorgan’s biggest trouble spots were in consumer banking and credit card lending. The bank’s retail financial services division, which includes its mortgage operations, lost $399 million. That was worse than the final quarter in 2008, when credit markets had essentially shut down because of the collapse of banks including Lehman Brothers.
The company reported increases in mortgages that were charged off, or classified as uncollectible, including prime mortgages, the highest-quality home loans. It also reported an increase in home equity loan charge-offs.
