Updated from 7:51 a.m.
surged 4% Wednesday after the bank blew out first-quarter estimates, raised its dividend and set a $10 billion stock buyback plan.
The New York firm made $4.8 billion, or $1.34 a share, for the quarter ended March 31, up from the year-ago $3.1 billion, or 86 cents a share. The latest quarter included an 11-cent accounting benefit. Analysts surveyed by Thomson Financial were looking for a profit of $1.02 a share.
"The investment bank, asset management and commercial banking each delivered record earnings. Private-equity gains were also very strong," said CEO James Dimon. "The firm's strong results include some benefit from the generally favorable credit environment, which we do not expect to continue indefinitely."
The bank boosted its quarterly dividend by 4 cents to 38 cents a share and put in place a $10 billion repurchase program, replacing an $8 billion plan under which it had bought back some $7.15 billion in stock.
The massive stock buyback is driven by JPMorgan's belief that its shares are a good buy and not as a means of returning cash to shareholders, explained Dimon.
"On the reinvestment side, we're not looking at buybacks as something to do on a continual basis but opportunistic reinvesting excess capital," echoed CFO Mike Cavanagh. "We'll buy back stock as long as we think it will be attractive to the shareholders."
Overall, JPMorgan revealed solid performance and an ability to manage the subprime bug that bit financial institutions such as
The company sold all of its 2006 production, Cavanagh said, noting that the company received attractive prices for its loan portfolio.
Dimon emphasized, however, that JPMorgan views the subprime space as a market the bank wants to grow in, especially given that the meltdown has upended numerous subprime lenders.
"The subprime business properly done is a good business, so we are going to continue," he noted, adding that the bank has both increased its reserves in anticipation of further losses in subprime and tightened its loan underwriting.
"We're seeing a lot of people do common changes to underwriting, but I think our share will go up and our number of sales people in the business will go up," Dimon added. "I just think we are going to gain
Shares rose $2.04 to $52.22.