Banks look on as JPMorgan sets the pace

WALL Street bellwether JPMorgan Chase raced past expectations with a 57 per cent rise in profits yesterday, fuelling hopes that recovery in the US financial sector is entering full swing.

The first American bank to report in 2010, JPMorgan said first quarter net income jumped to $3.3bn (£2.1bn), or 74 cents per share, from $2.1bn, or 40 cents per share, from this time last year.

The numbers were driven by strong performance from its investment banking division, which generated a profit of $8.3bn – roughly in line with the bumper first quarter of 2009.

Market watchers were particularly encouraged to see continued strength in JPMorgan’s fixed income department.

The widely-held belief had been that last year’s exceptional performance in fixed income markets would be impossible to repeat.

Analysts also took note of the lower amounts set aside for future losses and bad credit card loans. The bank’s credit card unit lost $303m in the first quarter, nearly 45 per cent less than last year, suggesting an imminent turn in the credit quality cycle.

Chief executive Jamie Dimon offered a glimpse of light at the end of the tunnel for other Wall Street banks.

Dimon said: “While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends.”

JPMorgan was confident these trends would gather momentum, Dimon added. But the results set a high bar for JPMorgan’s competitors, which release their first quarter figures over the coming weeks.