Jamie Dimon, chief executive of J.P. Morgan Chase, announced Thursday that the bank's second-quarter net income fell 53 percent as a result of the continued credit crunch and $540 million in costs for the acquisition of Bear Stearns.
But investors greeted the dismal numbers as good news given that they exceeded estimates. J.P. Morgan Chase shares rose 5 percent in early trading.
The nation's third largest bank recorded $1.1 billion in write-downs in the second quarter, and it earnings dropped to $2 billion, or 54 cents a share, compared to $4.2 billion, or $1.20 a share in the second quarter of 2007.
But its write-downs were minimal in scale compared to those reported recently by J.P. Morgan chief rivals. In addition to higher-than-expected revenue, J.P. Morgan reported growth in its retail financial services.
"J.P. Morgan is obviously much better positioned in a very tough environment," Peter Boockvar, equity strategist at Miller Tabak & Co., told Reuters.
Still, Dimon called for caution.
"Our expectation is for the economic environment to continue to be weak -- and to likely get weaker, and for the capital markets to remain under stress," said Dimon during a conference call.
The second-quarter figures included $540 million in losses for J.P. Morgan Chase's $1.08 billion purchase of Bear Stearns in May.
"Through the truly remarkable partnership and efforts of our people in extremely difficult times, we made great progress towards full integration, while also significantly reducing our combined risk positions," said Dimon, in reference to the Bear Stearns acquisition, according to the Wall Street Journal. "We now have an expanded platform to better serve our institutional clients – one which we fully expect will make our franchise stronger over time."