JP Morgan Chase, the second largest bank holding company, posted an 18 per cent drop in first-quarter net profits today because of investment losses, large problem loans, and a drop in fees from advising corporate clients on mergers.
JP Morgan was a leading lender to big companies like bankrupt energy trader Enron, leaving the bank with problem loans. Sluggish capital markets restrained investment banking and trading results, while slack stock markets left it with investment losses.
Excluding one-time items, operating profits were $1.15 billion, or 57 cents a share.
Operating profits at its investment bank, which advises on stock offerings and mergers, fell 27 per cent in the first quarter from a year earlier, to $755 million, and trading revenues fell 19 per cent, to $1.70 billion.
Investment banking fees fell 21 per cent, to $741 million.
Profits at JP Morgan's retail and middle market financial services arm, which includes branch banking, rose 25 per cent in the quarter, to a record $526 million.