Further evidence of deteriorating US economic conditions emerged Wednesday as both JPMorgan Chase and Wells Fargo reported that Q4 quarter earnings had been hit by higher provisions for loan losses in consumer-related businesses. The news followed Citigroup’s disclosure on Tuesday that credit costs in its US consumer business had risen by $4.1bn. However, JPMorgan once again avoided the huge writedowns plaguing its rivals, announcing a $1.3bn writedown on subprime mortgage-related holdings. That compared with Citi’s $18.1bn writedown and $15bn or more expected from Merrill Lynch on Thursday. Meanwhile, Wells Fargo reported its lowest quarterly profit in six years as earnings fell 38% to $1.36bn from $2.18bn last year. Wells set aside $1.4bn to cover anticipated loan losses. Shares in JPMorgan rose 8.5% to $42.50 in afternoon trade as investors cheered the relatively light subprime hit and absorbed remarks by Jamie Dimon , chief executive, suggesting the weakness in financial shares would facilitate acquisitions at bargain prices. Lex says JPMorgan has achieved “no small feat” and should now put its balance sheet to work for clients.

This entry was posted by Gwen Robinson on Thursday, January 17th, 2008 at 5:53 and is filed under Capital markets, People. Tagged with jpmorgan, wells fargo. Edit this entry.