Chase Profits Plummet, Credit Cards Soft in Quarter

JPMorgan Chase (NYSE: JPM) reported first quarter profits of nearly $2.4 billion, a decline of more than 50 percent from the first quarter of 2007. The bank attributed the decline to write downs for mortgages and leveraged loans, and setting aside money for continuing loan losses.

Chase set aside more than $5.1 billion for credit losses on a managed basis, three times the $1.6 billion set aside in the first quarter of 2007. Chase also added $2.5 billion to its credit reserves.

Jamie Dimon, Chase chairman and CEO, warmed investors that the outlook for the firm is rocky in the near term and possibly into next year.

“Our expectation is for the economic environment to continue to be weak and for the capital markets to remain under stress. These factors have affected, and are likely to continue to negatively impact, our firm’s credit losses, overall business volumes and earnings — possibly through the remainder of the year, or longer,” Dimon said in a statement.

The Card Services group saw net revenues of $3.9 billion, up 6 percent from $3.7 billion a year ago. Net income fell 20 percent to $609 million from $765 million.

The managed net charge-off rate for the quarter was 4.37 percent, up more than 22 percent from 3.57 percent in the prior year. The 30-day managed delinquency rate was 3.66 percent, up more than 19 percent from 3.07 percent a year ago. Chase reported that the rise in charge offs led it to increase the managed provision for credit losses to nearly $1.7 billion from $1.2 billion.

Managed receivables at the end of the quarter totaled $150.9 billion, a growth rate of 3 percent from a year ago. Chase received $955 million as its share of the initial public offering in March of payments network Visa.

The auto finance division reported net income of $74 million, down 13 percent from the prior year, although net revenue rose nearly 30 percent to $530 million. The net charge-off rate rose to 1.10 percent from 0.59 percent a year ago.