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JPMorgan rides American consumer to profits

January 14, 2011 | 11:42 am

What a difference a year makes.

Last year at this time, JPMorgan Chase & Co. covered its losses from struggling retail customers with profits from its Wall Street trading operations. Now it is the ordinary folks who are helping make up for declining profits on Wall Street.

Friday morning JPMorgan was the first of the big banks to report fourth-quarter earnings. Quarterly profit was up 47% from last year, to $4.86 billion. For the year profit was up 48% to $17.4 billion compared with 2009, the bank said in a statement.

In a call with analysts, the bank's chief executive, Jamie Dimon, said that some of the biggest drivers of profit were "due to a continued improvement on credit as well as the improvement in the economic environment."

Earnings per share of $1.12 beat the consensus expectations of analysts and JPMorgan's stock was up 3.2%, or $1.41, to $45.86 at midday.

The biggest jump in profit came in the bank's credit card division, which benefited from the improving credit outlook of American consumers.  

Dimon said that more people are taking "their Chase cards out of their wallets at the store."

Going into this earnings season there has been growing pessimism about the trading operations and investment banking activities that pulled banks such as JPMorgan out of the financial crisis much sooner than other sectors of the economy.

JPMorgan did better than anticipated in this area, but profit was down from last year.

Some of the jump in the stock price comes from the growing anticipation that JPMorgan will now raise the dividend paid to shareholders. Dimon said the government is set to publish new capital requirements for banks in March and that the bank hopes to boost its payout soon after that.

-- Nathaniel Popper