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Banks' profits plunge
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July 18, 2001: 10:06 a.m. ET
J.P. Morgan Chase, FleetBoston miss forecasts, cite continued market slump
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NEW YORK (CNNfn) - Two of the nation's largest banks -- J.P. Morgan Chase & Co. and FleetBoston Financial Corp. -- on Wednesday reported sharply lower second-quarter profit from continued weakness in brokerage and investment banking activities due to a prolonged stock market slump.
New York-based J.P. Morgan Chase (JPM: up $0.30 to $42.60, Research, Estimates) , the No. 2 U.S. bank in terms of assets, reported earnings of $690 million, or 33 cents a diluted share, down from $1.76 billion, or 89 cents a share, in the year-earlier quarter.
Analysts surveyed by earnings tracker First Call had forecast earnings of 65 cents a share.
Operating revenue at the investment bank fell 11 percent to $3.78 billion in the second quarter of 2001.
Those results are restated to treat the former Chase Manhattan Corp. and J.P. Morgan & Co. as a single company at that time, even though their merger was not completed until December.
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"We are not satisfied with our financial results, which have been
negatively affected by weak markets and deterioration of private
equity values," said J.P. Morgan Chase President and CEO William B. Harrison, Jr.
FleetBoston (FBF: down $0.55 to $36.70, Research, Estimates) reported second-quarter profit shrunk 45 percent, earning $531 million, or 48 cents a share, compared with $971 million, or 87 cents a share, in the year-earlier quarter.
The First Call consensus of analysts had forecast earnings of 79 cents a share.
The results included an after-tax writedown of $290 million, or 27 cents a share, from FleetBoston's primary capital market investments, Principal Investing.
Revenue for FleetBoston fell 29 percent as its capital markets unit -- which includes revenue from principal investments, Quick & Reilly and Robertson Stephens -- posted a loss of $100 million, compared with a gain of $820 million last year. The loss was largely due to the writedown in Fleet's $4 billion portfolio, which the company blamed on poorly performing technology and telecom investments.
"In terms of outlook, we remain grounded in our expectations for capital market conditions and the economy. Until discernible improvement in the environment occurs, we consider it prudent to assume the contribution of our capital markets businesses to be modest," said Terrence Murray, FleetBoston's chairman and CEO. 
--from staff and wire reports
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J.P. Morgan Chase
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