JPMorgan Chase & Co.'s profit rose more than four-fold to $3.28 billion in the last three months of 2009, but the results released Friday were tempered by rising loan losses at its consumer bank.
Its shares fell almost 1 percent in early trading.
The banking giant said its investment banking and asset management businesses continued to profit from the 10-month market rally, allowing it to more than overcome the losses from consumers' continuing defaults on a variety of loans.
JPMorgan Chase earned $702 million a year earlier when the near-collapse of the mortgage banking business forced it to write down the value of billions of dollars in loans.
But over the past year, record-low interest rates have allowed banking companies to profit when lending money at higher rates.
And the boom in the financial markets have brought in billions of dollars in trading and underwriting revenue that was decimated a year earlier by the stock market crash.
Investors were disappointed, however, probably because the company didn't raise its 5 cents per share quarterly dividend, as the market had hoped.
JPMorgan Chase stock was down 33 cents at $44.29 in preopening trading.
When JPMorgan announced third-quarter results in October, bank executives said they would consider raising the dividend when loan losses stabilize and the company's credit costs fall.
Leaving the dividend unchanged may have investors worried the bank is still uncertain about when loan defaults will start to moderate and how big an impact that might have on 2010 earnings.
The market rally allowed JPMorgan to give big bonuses to its employees for 2009.
The company said its total pay costs, including salaries, bonuses and benefits, rose 18 percent in 2009, although the company cut its work force by 1 percent during the year.
The average compensation per employee rose to $121,124 in 2009 from $101,110 a year earlier.
Big banks have been heavily criticized for handing out lavish pay packages after they helped cause the recession with bad mortgage bets and then needed the government to bail them out.
JPMorgan Chase received $25 billion in bailout money in the fall of 2008 at the peak of the credit crisis. It paid back that money in the middle of 2009.
During the final three months of the year, JPMorgan Chase earned 74 cents per share, easily topping analysts expectations of 61 cents, according to Thomson Reuters.
The bank's total revenue fell below expectations, and that may also have troubled investors early Friday.
JPMorgan Chase had $25.24 billion in revenue on a managed basis, which excludes certain items such as the effect of packaging and selling pools of credit card debt.
Analysts predicted JPMorgan Chase would generate $26.8 billion in revenue.
JPMorgan earned $1.9 billion in its investment banking division, while its asset management division generated $424 million in net income.
Fees from underwriting debt and stock offerings continue to surge in the fourth quarter.
Debt underwriting fees jumped 58 percent to $732 million from a year earlier, while stock underwriting fees climbed 66 percent to $549 million.
JPMorgan set aside $7.28 billion for loan losses, essentially the same as it did during the quarter a year earlier, but 10 percent lower than the third quarter.
Nearly all banks have struggled with mounting loan losses as more customers fall behind in repaying loans while unemployment remains high.
Unemployment remained at 10 percent in December.
For the full year, JPMorgan earned $11.7 billion, or $2.26 per share on record managed revenue of $108.6 billion.
The bank earned $5.6 billion, or $1.35 per share in 2008.
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