JPMorgan Earnings: The Return of Big Bank Profits

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If JPMorgan Chase's (JPM) fourth-quarter earnings are any indication, profits at money center banks and investment firms have rebounded to pre-credit-crisis levels. The firm earned $4.8 billion, or $1.12 a share -- a 47% improvement from last year. The results compared with an average per-share estimate for adjusted earnings of $1 projected by Bloomberg analysts. The numbers were strong even though the firm took charges for its mortgage-related legal expenses.

Full-year 2010 net income was $17.4 billion, an increase of 48% compared with $11.7 billion for the prior year. Earnings per share were $3.96, compared with $2.26 for 2009.

Jamie Dimon, chairman and chief executive officer, commented: "Solid performance in the quarter and for the year reflected good results across most of our businesses, which benefited from strong client relationships and continued investments for growth. Credit trends in our credit card and wholesale businesses continued to improve. In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns."

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Investment bank net income was $1.5 billion, down 21% from the prior year and up 17% from the previous quarter. The decrease from 2010's fourth quarter reflected higher noninterest expenses, partially offset by stronger revenue and provision for credit losses; the increase from the prior quarter reflected the revenue and lower credit loss provisions.

Retail financial services net revenue was $8.5 billion, an increase of $856 million, or 11%, compared with the year earlier. Net interest income was $4.8 billion, down by $241 million, or 5%, reflecting the impact of lower loan balances and narrower loan spreads, and was partially offset by an increase in deposit balances. Noninterest revenue was $3.7 billion, up by $1.1 billion, or 42%, as higher mortgage fees and related income were partially offset by lower deposit-related fees.

Retail bank net revenue was $4.4 billion, down 2% compared with the previous year. The decrease resulted from lower deposit-related fees and was partially offset by an increase in deposit balances.

Mortgage banking and consumer lending net revenue was $2.8 billion, up by $1.2 billion, or 74%, from a year earlier. Mortgage banking net revenue was $2 billion, up by $1.1 billion. Other consumer lending net revenue, comprising auto and student lending, was $827 million, up by $45 million, predominantly as a result of higher auto loan and lease balances.

Dimon wants to raise the bank's dividend. The results may just give him that chance.

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