The Telegraph
Since 1st March, 1999
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J.P. Morgan flashes profit warning

New York, Sept. 18: Earnings at J.P. Morgan Chase & Co will be even worse than expected in the third quarter because of bad loans to telecommunications companies and weak trading results, the company said Tuesday.

Stung recently by its relationship with Enron, losses on its loans to ailing companies, and its business in Argentina, the company has failed repeatedly to meet expectations since the merger of J.P. Morgan and Chase Manhattan nearly two years ago.

The bank’s chief executive, William B. Harrison Jr., has been under increasing pressure to stabilise the financial results and prove that the merger was worthwhile.

“I am very disappointed with our results and take full responsibility for them,'' Harrison said in a conference call with analysts after the markets closed.

Still, he insisted, “We don’t think this quarter is representative of our future prospects.”

The bank said that write-offs and additional reserves against potential losses on loans to companies, especially telecommunications and cable companies, would rise to $ 1.4 billion in the third quarter. That is up sharply from $ 302 million in the previous quarter.

J.P. Morgan Chase said it had trading revenues of just $ 100 million in July and August, compared with $ 1.1 billion for the full previous quarter. Even that figure had been disappointing, with the bank citing volatility in the emerging markets.

On the conference call on Tuesday, the bank’s executives said that no single trading area was responsible.

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