This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7191795.stm

The article has changed 4 times. There is an RSS feed of changes available.

Version 0 Version 1
JP Morgan's $1.3bn sub-prime hit JP Morgan's $1.3bn sub-prime hit
(about 5 hours later)
US bank JP Morgan Chase has said its earnings for the last three months of 2007 fell 34% as a result of its exposure to soured US mortgage loans.US bank JP Morgan Chase has said its earnings for the last three months of 2007 fell 34% as a result of its exposure to soured US mortgage loans.
Net income was $2.97bn (£1.5bn) in the quarter to the end of December, down from $4.53bn a year earlier, it said.Net income was $2.97bn (£1.5bn) in the quarter to the end of December, down from $4.53bn a year earlier, it said.
The losses were caused by the bank cutting the value of investments linked to the US housing market, it said. Other US and European banks have also had to cut the value of investments linked to the US housing market.
JP Morgan is the latest US bank to be hurt by problems stemming from mortgage-related investments. Also on Wednesday, Wells Fargo said the home loans crisis had led to its first drop in quarterly profits since 2001.
However, its losses were smaller than those of many of its peers. Wells Fargo, the biggest bank on North America's West Coast, reported a 38% decline in net income to $1.36bn for its last three months of 2007.
However, the losses at JP Morgan and Wells Fargo were smaller than those of many of their peers.
On Tuesday, Citigroup reported a $9.83bn net loss for the last three months of 2007 after having to cut the value of its investments by $18.1bn.On Tuesday, Citigroup reported a $9.83bn net loss for the last three months of 2007 after having to cut the value of its investments by $18.1bn.
Shares in JP Morgan rose 4.26% to $40.85, one of the few winners on Wall Street, while Citigroup fell 3.16% to trade at $26.09. Citigroup has lost more than half its market value since the beginning of 2007.
MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn UBS: $13.5bn Morgan Stanley $9.4bn Merrill Lynch: $8bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnJP Morgan Chase: $1.3bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $439mSource: Company reports Timeline: How the sub-prime crisis unfolded
Further problems
JP Morgan chief executive Jamie Dimon said the bank had set aside $2.54bn in anticipation of further losses stemming from defaults on home loans and credit card repayments.
This was more than the $1.79bn it set aside in its previous quarter, and comes as consumers are having to deal with falling house prices, and higher energy and petrol costs.
JP Morgan's investment bank division was worst affected, with its profits slumping 88% to $124m. The company's credit card services arm was also hit, with profit down 15%.
Many of the problems facing banks today stem from a long period of low interest rates, which saw consumers borrow heavily and often beyond their means.
That was fine while interest rates stayed low, but as borrowing costs started to rise many consumers found it difficult to keep up with their loan and mortgage payments.
Default levels jumped to records, slashing the value of investments that had been linked to the mortgages and credit card debts, and plunging the global banking system into a credit crunch and lending crisis.