Thursday, April 16, 2009

Wall Street Fluctuates As JP Morgan Net Tops Estimates, General Growth Files For Bankruptcy

. Thursday, April 16, 2009

By stockOzone team

US stocks fluctuated between gains and losses in morning session after JP Morgan (NYSE: JPM) delivered better than expected results and General Growth Properties filed for bankruptcy. Early on Thursday, the New York City-based bank reported that first-quarter net income fell to $2.14 billion, or 40 cents a share, compared to $2.37 billion, or 67 cents a share, in the year ago period. Revenue rose to $25 billion from $16.9 billion.Consensus estimates were JPMorgan Chase to register a profit of $1.38 billion, or 32 cents a share.

Bolstering the bank's results were both its consumer and investment banking divisions, but JPMorgan Chase also logged $10 billion in credit costs during the quarter, which included a $4 billion addition to its loan loss reserves.

JPMorgan Chase CEO Jamie Dimon said that at of the end of the quarter,Tier 1 capital ratio, a key measure of a bank's ability to absorb losses, stood at 11.3%. Not including the $25 billion that the Treasury Department injected into the firm in October, Chase's Tier 1 ratio was 9.2%. A Tier 1 ratio above 8% is generally considered healthy.

JPMorgan Chase is among a handful of banks that have hinted at their interest in repaying taxpayer funds they received from the Treasury's Troubled Asset Relief Program, or TARP, given the increasing restrictions imposed on banks participating in government rescue programs.The company added a total of $4.2 billion to credit reserves, raising its aggregate provision to $28 billion, representing 4.53% of assets, the company said."We remain focused on capital and balance sheet strength. These levels of capital and reserves, combined with our significant pre-provision earnings power, enable us to withstand an even worse economic scenario than we face today," said Chief Executive Jamie Dimon, in a press release.

Meanwhile, in what can be seen as a fresh sign of trouble in housing market, General Growth Properties Inc.(NYSE: GGP), the second-largest US mall operator, filed for Chapter 11 bankruptcy protection early Thursday after it failed to refinance maturing debt.

RealtyTrac said that foreclosure filings, including default notices, auction sale notices and bank repossessions, on U.S. properties reached 341,180 in March, up 17% from February and 46% from a year ago.

Also, a Department of Commerce release showed housing starts fell 10.8% in March to seasonally adjusted annual rate of 510,000. Economists expected Housing Starts to decline to an annual rate of 540,000.

Building Permits dropped 9% to annual rate of 513,000. Economists had anticipated building permits to drop to 549,000 in March.

Disclosure: Author does not own any of the stocks discussed here.

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