US bank beats forecasts despite sharp fall in earnings

Net income fell 40% at JP Morgan Chase & Co in the first quarter compared with the same period a year earlier, but the results soundly beat analysts' expectations.

The New York bank, second in size only to Citigroup, has become the latest to report lower earnings because of the sluggish US economy and volatile stock market, which cut portfolio earnings and investment fee income.

Citigroup, Bank of America, FleetBoston Financial and Bank One have this week said their earnings fell in the first quarter, but still beat analysts' estimates. First-quarter earnings were up at the Bank of New York and Wells Fargo.

JP Morgan Chase said net income was $1.2bn, or 58 cents a share, in the January-March period. This compares with $1.99bn, or $1.01 a share in the same period a year earlier.

Excluding special charges, mainly for an accounting change on derivatives and hedging, first-quarter earnings were $1.44bn, or 70 cents a share. That was higher than the 66 cents expected by analysts surveyed by Thomson Financial/First Call.

JP Morgan Chase's president and chief executive William B. Harrison Jr said: "Our performance in the challenging first quarter environment reinforces our belief that having a broad range of leadership product capabilities matched with a large client base is the right vision."

Like other banks, JP Morgan Chase reported increases in non-performing loans and loan loss provisions.

The bank said its non-performing assets totaled $2.23bn on March 31, compared with $1.84bn a year earlier.

Its loan loss provision was $447m in the first quarter, compared with $342m a year earlier.

JP Morgan Chase was formed by the merger on December 31 of Chase Manhattan and JP Morgan.