JP Morgan defies crisis to post doubled profits

Click to follow

US banking giant JP Morgan Chase kicked off a bumper results season for Wall Street titans today after more than doubling profits in 2009.

The figures revealed pay, bonuses and benefits across the bank as a whole rose 18% to 26.9 billion US dollars (£16.5 billion).

JP Morgan - one of the strongest banks through the crisis - posted net income of 11.7 billion dollars (£7.2 billion) for the year - up from 5.6 billion dollars (£3.4 billion).

The performance comes a day after President Obama launched plans to claw back 90 billion dollars (£55 billion) for the US taxpayers over 10 years in return for support given during the financial crisis.

TUC general secretary Brendan Barber said: "These obscene bonuses paid so soon after the world's taxpayers had to rescue the banking system show that there is something fundamentally wrong in the relationship between banking and the rest of the economy.

"Banks are meant to support society, but instead taxpayers' support guarantees that whatever happens to the economy banks will continue to pay gigantic bonuses.

"The best way to reintegrate banks into society is to make sure they pay a proper contribution through a transaction tax - a solution rapidly gaining support both here and abroad."

JP Morgan, which has about 15,000 staff in the UK, swallowed up failed rivals Bear Stearns and Washington Mutual in 2008. This helped push revenues to a record 108.6 billion US dollars (£66.7 billion).

The bank took 25 billion dollars (£15 billion) from the US Government at the height of the meltdown - which it has since paid back - but avoided the worst of the sub-prime meltdown and never posted a quarterly loss.

Chief executive Jamie Dimon however added that he remained "cautious" over the outlook.

"While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist," he said.

Despite rising bad debts at its retail arm, JP Morgan's investment banking division generated almost two thirds of its overall profits as the company benefited from stock market rallies and fundraising by major companies and Governments.

Compensation and benefits at the division were up 21% to 9.33 billion dollars (£5.7 billion) compared with the previous year - representing about a third of the investment bank's revenues.

But Wall Street banks will be braced for the president's Financial Crisis Responsibility Fee as Barack Obama pledged yesterday to get back "every dime" for the US taxpayer.

The levy on the liabilities of the banks - which could cost UK banks with significant US operations a reported £10 billion - will remain in place as long as it takes to get the money back, the president said.

In the UK, Chancellor Alistair Darling has unveiled a 50% tax on bank bonuses which is expected to raise more than £500 million - although it could be more if banks choose to maintain mega-payouts and stump up the tax.

Prime Minister Gordon Brown's spokesman said the Treasury was studying Mr Obama's proposals, but stressed that individual countries' responses would depend on particular circumstances.

He acknowledged that Mr Darling's temporary 50% levy on bonuses over £25,000 had been intended to encourage a change in behaviour, but said it had always been up to the financial institutions to decide for themselves whether they would reduce payouts or take the tax hit.

"It is about encouraging behaviour change," said the spokesman. "The Government has always been clear that some of the behaviour we saw in previous years was unacceptable and some of that was linked to bonus payments."