JPMorgan profit falls, but sees hope in economy
By David Henry
(Reuters) - The drag of the European debt crisis on investment banking weighed on JPMorgan Chase & Co's fourth-quarter profit, sending financial stocks tumbling even as the bank provided evidence that the domestic economy is strengthening.
Chief Executive Jamie Dimon said the New York-based bank was seeing signs of improvement in credit quality as well as loan demand from corporations and consumers in the United States.
"We see a mild recovery which actually might be strengthening, and it's broad," Dimon said in a conference call with reporters following the earnings report on Friday. "Hopefully, it will add to more jobs. We have seen jobs growing ... it's not enough but it could be self-sustaining."
Loan balances in JPMorgan's commercial division were up 13 percent at the end of December compared with a year earlier, the sixth consecutive quarterly rise in the measure of business borrowing.
But Dimon sounded renewed alarm on the European debt crisis. "I would put myself in the 'increasing worried' category," he said.
His comments came shortly before a senior euro zone government source said credit rating agency Standard & Poor's was set to downgrade several euro zone countries, not including Germany. The report sent the euro and U.S. markets lower.
JPMorgan shares fell 3.2 percent in midday trading on the New York Stock Exchange, while the KBW banks index was down 0.7 percent.
JPMorgan is the first major U.S. bank to announce results for the fourth quarter. Its weak investment banking results suggest Wall Street firms Goldman Sachs Group Inc and Morgan Stanley will also report tough quarters when they issue results next week. Continued...