After almost two and a half years of sobering news, the head of JPMorgan Chase raised his outlook for the rest of 2010 as first-quarter income rose 57 percent.

Jamie Dimon, JPMorgan’s chairman and chief executive, said that there were strong signs the economy was stabilizing as fewer borrowers fall behind on their loans.
“While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends,” he said in a statement. “We believe these improvements will continue and are hopeful they will gather momentum.”
Mr. Dimon’s upbeat remarks come as the bank had another strong showing as a sharp reduction in loan loss reserves helped raise earnings. Hefty trading profits in the investment bank once again helped offset the weaker performance of its Chase retail banking and credit card units.
Over all, JPMorgan said its first-quarter income was $3.3 billion, or 74 cents a share. That compared with income of $2.1 billion, or 40 cents a share, a year earlier as profit surged in the months after following the crisis. Revenue, at $28.2 billion, exceeded forecasts.
Analysts surveyed by Thomson Reuters had forecast income of 64 cents a share on revenue of $26.46 billion. As one of the first banks to report this quarter, JPMorgan’s results could set a benchmark for the rest of the financial industry. Bank of America, Goldman Sachs, Morgan Stanley, and Citigroup all report in the coming week. Investors will be looking for signs that fewer borrowers are defaulting on their loans — and that the underlying business is improving.
“We continued to see delinquencies stabilize, and in some cases improve, in our credit portfolios,” Mr. Dimon said. Of course, Mr. Dimon noted, the bank’s portfolio will track the health of the broader economy.
Even as the country emerges from a deep recession, the job market has not yet rebounded. Demand for new loans is still weak. Meanwhile, there are only tentative signs that home prices are nearing a bottom.
And JPMorgan’s problems are not yet over. The bank set aside several billion dollars to cover future losses reserves — still a large sum but a smaller amount than in prior quarters. It has now stockpiled a total of $39 billion, or roughly 5.6 percent of loans. The bank also set aside another $2.3 billion in additional litigation reserves amid fierce legal fights over faulty mortgages and a pitched battle with Washington Mutual bondholders over that company’s remnants.
JPMorgan has emerged from the crisis in better shape than most of its peers, which suffered bruising losses or a devastating blow to their reputation, or in many cases, both. Today, no bank — and no bank leader — is showing more confidence on Wall Street or Washington, where it is aggressively fending off a consumer protection agency and seeking big exemptions from derivatives rules.
The investment bank unit posted strong trading revenue after a first quarter rally in the fixed-income markets, though well short of the blow-out profits during the first quarter last year. It did not fair as well in dispensing merger advice, though business was down across the industry.
Chase’s consumer businesses, however, are still hemorrhaging money. And stealing a page out of the Citigroup playbook, Mr. Dimon divided his Chase retail banking business into two segments for reporting purposes: its existing operations, which will continue to grow; and a holding tank for its most troubled loans.
(Source: The NYT)