J.P. Morgan Chase

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posted first-quarter profits below year-ago levels as the newly merged firm braved a stock market slump.

J.P. Morgan Chase reported earnings of $1.44 billion, or 70 cents a share, beating the

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consensus estimate of 66 cents but falling from the year ago pro-forma $1.01 a share. J.P. Morgan and the former Chase Manhattan completed their merger at the end of 2000, so the year-earlier results were reported on a pro-forma basis, or as if the companies had been merged then.

Investment banking fees stumbled 24% due to "weak market conditions in equity capital markets" and merger and acquisition advisory. However, the firm said these were offset by higher bond underwriting and loan syndication. Trading revenue dipped 3% from year-ago levels.

J.P. Morgan's private equity arm J.P. Morgan Partners is likely to be closely watched as the venture capital unit contributed to sharply lower results in the fourth quarter due to its heavy exposure to New Economy companies. In the first quarter, J.P. Morgan reported a private equity gain of $132 million, a marked improvement compared with a fourth-quarter loss of $92 million, but still well below the outsize performance of early 2000. In the year-ago period, the firm posted a gain of $654 million.

J.P. Morgan Partners is subject to what is known as a "mark-to-market" accounting method where the value of its holdings is assessed with respect to current market valuations as opposed to the firm's initial investment. The firm said the latest quarterly results include a $412 million realized cash gain from public and private positions. That gain was partially offset by net unrealized losses of $280 million.

"The quarter was characterized by a challenging market environment that provided limited exit opportunities. Successful investment realizations in the energy and power sector were significant contributors to JPMP's performance in this environment," the firm said in a written statement.