NEW YORK: JP Morgan Chase & Co has reported a 78% jump in quarterly earnings, blowing past Wall Street estimates on strong bond trading and mortgage lending, but it sees lower profits in the second half of 2003.
Near record-low interest rates in the second quarter, coupled with volatility in the bond markets, catapulted the No. 2 US bank’s trading profits. Low borrowing rates boosted mortgage lending and losses from bad loans fell in the quarter, further bolstering the bank’s results.
But in a conference call with analysts, chief financial officer Dina Dublon echoed earlier comments from executives and said the firm expected “lower profitability and earnings per share in the second half of 2003.”
Interest rates, which had run higher in recent weeks, were expected to rise further in the second half if the US economy strengthened as predicted, reducing the bank's ability to make big trading gains on bonds, she said.
For the second quarter, J.P. Morgan easily beat analysts’ estimates with a profit of US$1.83bil, compared with US$1.03bil a year ago. Last year’s figure had included a merger and restructuring charge.
Volatility in the US Treasury market bolstered fixed-income trading and helped J.P. Morgan’s investment bank operating earnings more than double to US$1.09bil. But underwriting fees and earnings from giving companies advice dropped 2% as the drought of initial public offerings continued in the second quarter.
Total net revenue in the quarter rose 27% to US$8.6bil. – Reuters
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