JPMorgan Chase's earnings soared 67 percent in the first quarter on higher fees from investment banking and as fewer customers fell behind on their credit card bills. The bank recorded more losses from its mortgage business, and CEO Jamie Dimon said he didn't expect those problems to go away soon.
"Unfortunately, these losses will continue for a while," Dimon said in statement. "Rest assured, we are fully engaged in fixing our problems and addressing our mistakes from the past."
Outside of real estate, JPMorgan did well. The nation's second-largest bank by assets said more of its customers were paying on time. Only 3.25 percent of loan payments were late by 30 days or more, a drop of 0.41 percentage point from the previous quarter. Customers were also spending more. The volume of transactions on Chase credit cards rose 12 percent.
The New York bank reported Wednesday that it earned $5.6 billion, or $1.28 per share, compared with $3.3 billion, or 74 cents a share in the same period last year. The profits at JPMorgan, the first bank to report first-quarter earnings, were way ahead of the $1.15 per share analysts surveyed by FactSet were expecting.
JPMorgan Chase's profits included $2 billion from reducing its credit card loan reserves as delinquencies fell. Revenue fell to $25.2 billion from $27.7 billion in the same period last year. Despite the better bottom-line numbers, JPMorgan's shares gave up early gains and fell 39 cents to $46.25 after news that Federal regulators had ordered several banks to reimburse homeowners that were improperly foreclosed upon.
JPMorgan Chase added new branches as it anticipates increased demand for lending as the economy recovers. Speaking on a conference call with analysts, JPMorgan's chief financial officer Douglas Braunstein said the bank built 33 new branches in the first quarter and plans to add as many as 200 over the rest of 2011.
Braunstein said businesses were also showing signs of growth. The average loan balances for midsize companies rose 13 percent from a year ago and a larger number of companies tapped into their lines of credit for the first time in several quarters.
The slump in real estate continued to weigh heavily on JPMorgan's results. The bank increased its provision for mortgage-related losses by $1.1 billion. Its home equity loan portfolio had losses of $720 million and sub-prime mortgage losses were $186 million. Losses from "prime" mortgages, or loans made to borrowers with good credit, were $165 million.
The portion of JPMorgan's mortgage customers who were late by 30 days on their payments fell to 6.2 percent, compared with 7.3 percent a year earlier. In the quarter, the bank also lost $1.1 billion from increased costs to service mortgages, an expense of $650 million due to costs from foreclosures and mortgage repurchase losses of $420 million.
In a conference call with reporters, Dimon said he expects that JPMorgan and other banks will pay more fees and penalties after an investigation by the attorneys general of all 50 states is finished. The attorneys general are looking into allegations that the banks bungled foreclosure proceedings.
On Wednesday, JPMorgan Chase, Bank of America, and Wells Fargo were among 16 of the nation's largest mortgage lenders who were directed by the Federal Reserve and other federal banking regulators to reimburse homeowners who were improperly foreclosed upon. The Fed also warned of more fines in the future.
Meanwhile, investment banking profits soared at JPMorgan Chase, even though revenue fell to $8.2 billion from $8.3 billion in the prior year. Fees rose 23 percent to $1.8 billion. That included record debt underwriting fees of $971 million, up 33 percent from the prior year, and a 41 percent increase in advisory fees to $429 million.