No one expected JPMorgan Chase to post these profits. On January 15, 2009, the financial giant posted surprising quarterly profits. These profits came, despite of the massive the company took in “its investment banking business.” After the hit in the investment banking business, the company was forced to set a huge portion of money aside. This “chunk of cash” will be used in the event of loan losses.
JPMorgan Chase reported that its net income fell 76 percent during the fourth quarter of last year. Thus, its net income ended up at $702 million. That equals $0.07 per share. During 2007′s fourth quarter, the company ended up with $2.97 billion (or $0.86 per share).
You might look at those numbers and feel extremely bad for the New York City-based bank. Don’t. These statistics were far better than expected. Financial analysts were expecting the company to barely break even.
Why did they do better than just break even? Much has to do with its “one-time gain of $1.3 billion.” This gain was due largely to its purchase of Washington Mutual late last year. Without this purchase, the company said it would have been forced to report of a loss of $0.28 per share.
JPMorgan Chase’s revenue also fell. Analysts predicted that revenue would fall to $18.8 billion. However, it fell to $17.2 billion.
How did JPMorgan Chase’s investors take the news? Extremely well. In fact, many of its investors seemed to be “encouraged by the news.” Because of this, JPMorgan Chase’s share rose approximately 2% on Thursday morning.
The investors may be encouraged, but the company’s CEO and Chairman, Jamie Dimon, called the results, “very disappointing.
Dimon said the results were because of the failure of the company’s investment banking business. This segment of the company took a brutal hit after a “series of writedowns on its leveraged loan portfolio and mortgage-related investments” took place.
Considering the state of the economy right now, JPMorgan Chase needs to feel pretty good about the current state of affairs of its company. There are thousands of banks around the country that only wish they too could have posted such fourth quarter results.
