JPMorgan drops leveraged loan commitments by $3.9 billion in first quarter

By Jennifer Lanning Drey

Portland, Ore., April 16 - JPMorgan Chase & Co. ended the first quarter with $22.5 billion of leveraged lending funded and unfunded commitments, Michael J. Cavanagh, chief financial officer of JPMorgan, reported Wednesday during the firm's quarterly earnings call.

The number is down from $26.4 billion at Dec. 31 but "still obviously a large risk for [JPMorgan]," Cavanagh said during the call.

During the first quarter, JPMorgan closed, distributed or otherwise reduced $2.3 billion of commitments, while taking on $3.3 billion of new commitments at current market terms.

"We're still in business and we still want to facilitate clients," Jamie Dimon, chief executive officer of JPMorgan, said during the call.

The new loan total consisted of one "fairly large" loan and 10 smaller loans, he said.

JPMorgan transferred $4.9 billion of commitments to "held-for-investment" during the first quarter.

The firm took a first-quarter net markdown of $1.1 billion on its remaining funded and unfunded loan commitments.

$2.6 bln of markdowns

Challenging market conditions and the tough credit environment forced JPMorgan's investment bank to take $2.6 billion of markdowns and resulted in significantly lowered firm-wide first-quarter results.

In addition to the $1.1 billion markdown on leveraged loans, JPMorgan also took markdowns within the investment bank on prime, Alt-A and subprime mortgages.

Investment bank net revenue was $3.0 billion, down 52% from the prior-year quarter, partially reflecting lower underwriting fees. Fixed-income markets revenue was down $2.1 billion, or 82%, from the prior year, due to the markdowns, which were partially offset by record revenue in rates and currencies.

Firm wide, JPMorgan reported net income of $2.4 billion for the first quarter, compared with net income of $4.8 billion in the first quarter of 2007.

Dimon said the firm expects the economic environment to continue to be weak and capital markets to remain under stress, possibly through the end of the year or longer.

JPMorgan is a New York financial services firm with assets of $1.6 trillion and operations in more than 60 countries.

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