JPMorgan warns of more housing woes

Bank notes that losses on home-equity loans could hit $1.4B per quarter; also says there will be 12,000 job cuts related to WaMu merger.

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By David Ellis, staff writer

NEW YORK ( -- JPMorgan Chase warned of more housing weakness across its mortgage portfolio this year and also said it would cut more jobs related to its purchase of failed savings and loan Washington Mutual than originally planned.

During presentations at the company's investor day in New York Thursday, executives noted that home-equity loan losses could climb as high as $1.4 billion per quarter this year.

The New York City-based bank said "non-credit impaired" loans would suffer in 2009 due in large part to the ongoing decline in home prices across the country, as well as the weaker economic climate.

"We obviously believe that home equity losses will continue to grow for some period of time," said Charlie Scharf, head of JPMorgan Chase's consumer banking business.

So far, the worst losses have been centered in states that have been hit hardest by the housing crisis, including Florida, California and Nevada.

Last quarter, JPMorgan Chase reported a $770 million loss on its home equity loan portfolio.

The company also indicated it was prepared for the national unemployment rate to climb to 9% by the end of 2009. But the bank stuck by previous expectations that net charge-offs, or loans it doesn't think are collectible, in its credit card portfolio would hit 7% during the current quarter.

While much of Thursday's presentations focused on the performance of the bank's different businesses, JPMorgan Chase also shed more light on its recent purchase of WaMu.

The bank indicated that it would cut approximately 12,000 as a result of the acquisition of WaMu's banking operations late last year. As of early December, JPMorgan Chase had outlined plans to lay off 9,200 employees at the Seattle-based WaMu.

It was not immediately known, however, if the nearly 3,000 remaining cuts would come from just WaMu or from other parts of JPMorgan Chase's banking businesses.

JPMorgan Chase (JPM, Fortune 500) shares gained 9% in early morning trading on the New York Stock Exchange Thursday.  To top of page

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