J. P. Morgan & Co.'s first-quarter profit declined by 3.2% from the previous year, mainly because of reclassified loans to Brazil, the bank holding company reported Wednesday.
Morgan, the nation's fourth-largest bank holding company, said its net income for the quarter ended March 31 was $226.4 million, compared to $233.9 million a year earlier.
Morgan last month placed about $1.3 billion in medium- and long-term loans to Brazil on non-accrual status in response to the nation's suspension of foreign bank debt interest payments on Feb. 20. A number of other major U.S. banks also have reclassified Brazilian loans.
Brazil suspended the payments on $67 billion in loans pending the restructuring of its debt.
When loans are classified as non-accruing, the banks record interest payments when they actually are received, rather than when they are due. As a result, reclassifying the loans forces the banks to subtract interest payments originally recorded but not yet received.