Fourth-quarter earnings at JPMorgan Chase & Co. soared 68% on strong investment banking growth and a gain from the sale of the bank's corporate trust business, but signs of worsening credit quality worried investors.
The New York-based bank, the nation's third-largest, on Wednesday was the latest financial institution to report solid 2006 profit growth while warning of deteriorating credit as customers appeared to have more trouble keeping up with bills.
A day earlier, San Francisco-based Wells Fargo & Co. reported a 13% increase in fourth-quarter earnings, while U.S. Bancorp of Minneapolis eked out a 4% gain.
But credit losses increased at both banks, and some analysts believe that the weakening housing market and slowing economy could worsen credit quality at financial institutions in coming quarters.
JPMorgan Chase said its net income totaled $4.53 billion, or $1.26 a share, in the October-December period, up from $2.7 billion, or 76 cents, a year earlier.
Excluding the $622 million after-tax gain on the sale of its trust business, net income was $3.9 billion, or $1.09 a share.
That was well ahead of the 95 cents a share projected by analysts surveyed by Thomson Financial.
Revenue was $16.05 billion, slightly above the analysts' expectation, and 19% ahead of the $13.48 billion reported in the fourth quarter of 2005.
JPMorgan shares were down most of the session but ended the day up 4 cents at $48.43.
Jamie Dimon, JPMorgan's Chase's chairman and chief executive, told analysts in a conference call that he was pleased with the bank's performance.
"All of our six businesses have been getting stronger almost every quarter," he said.
At the same time Dimon again forecast higher loan delinquencies and losses in coming quarters, adding that "we've been warning you about that over time." He noted that credit quality had been unusually stellar after the change in the nation's bankruptcy laws in the fall of 2005 suppressed filings.
Dimon also said the bank would consider major acquisitions, but only if they fit into the company's business model.