JPMorgan Earnings Dive Linked to Mortgages

JPMorgan Chase & Co., New York, has reported net income of $2.4 billion ($0.68) per share for the first quarter 2008, down 50% from $4.8 billion ($1.34 per share) a year earlier, a nosedive linked to mortgage-related writedowns. Its investment bank lost $87 million for the quarter because of writedowns totaling $2.6 billion, including $1.2 billion of writedowns attributable to prime, alternative-A, and subprime mortgages. From the mortgage banking business itself, the company said it had net income of $132 million, up from $84 million one year earlier. Mortgage loan originations totaled $47.1 billion, up 30% from the volume a year earlier. Changes in the value of its mortgage servicing rights asset totaled negative-$425 million, compared with negative-$378 million in the first quarter of 2007. But it reported servicing revenue of $175 million, down from $204 million last year. JPMorgan Chase had $149 million in net chargeoffs of subprime loans, compared with $20 million in the previous year. The provision for credit losses totaled $2.5 billion for the quarter, including an increase of $1.1 billion in the allowance related to home equity loans and $417 million for subprime loans. Home equity net chargeoffs for the quarter totaled $447 million, compared with $68 million a year earlier.