US banking giant JP Morgan Chase today posted first-quarter profits of $2.1bn (€1.6bn), adding to hopes that the sector’s worst storms are behind it.
The profits from the firm – regarded as one of the US’s strongest banks – were 10% below the same period last year but still beat expectations on Wall Street.
Revenues also hit a record $26.9bn (€20.4bn) in the first three months of 2009, JP Morgan said.
The figures follow forecast-beating results from fellow US banks Wells Fargo and Goldman Sachs in an earnings season which has given cautious grounds for recovery.
The positive news also helped UK bank shares advance, with Lloyds Banking Group topping the FTSE 100 Index with an 11% gain. Barclays and Royal Bank of Scotland rose 9% and 7% respectively.
JP Morgan’s results were driven by a record profit of $1.6bn (€1.21bn) for the group’s investment bank.
This division posted a loss a year ago, before JP Morgan bought the nearly-collapsed investment bank Bear Stearns.
While loan defaults soared to $10bn (€7.5bn) over the quarter, the bank remains confident that it is strong enough to weather a further downturn in the economy. It is the only one of the US’s major banks not to post a quarterly loss since the turmoil began.
Chief executive Jamie Dimon said: “It is reasonable to expect additional increases to credit reserves if the economic environment worsens.
“Yet, we are confident that even a highly adverse economic scenario would not compromise our overall strength and stability – or our ability to enhance our franchises.”
An acquisition of another US struggler, Washington Mutual – bought last autumn - also helped it lift retail banking deposits by 62% and increase profits despite surging defaults at its credit card division.
JP Morgan is one of several bail-out recipients including Wells Fargo and Goldman Sachs expressing interest in repaying their government debt soon.
The bank got $25bn (€18.9bn) from the US government late last year to keep the financial system stable and increase lending.
JP Morgan has made around $150bn (€113bn) in new loans to an estimated 4.5 million consumers and prevented around 150,000 repossessions since last autumn.