JPMorgan Chase & Company's profit fell 50 per cent in the first quarter after the bank took a provision of US$5.1 billion to strengthen its reserves by US$2.5 billion and account for US$2.6 billion in losses in its loan portfolio.

The bank's results were above analysts' expectations, however, and supported Wall Street's belief that JPMorgan is navigating the credit crisis better than most other banks.

Investors sent JPMorgan's shares up $1.94, or 4.6 per cent, to US$44.06 - near where they were at the beginning of the year.

The New York-based bank, which recently bought the collapsing investment bank Bear Stearns, on Wednesday reported earnings of US$2.37 billion, or 68 cents per share, and US$16.9 billion in net revenue.

The profit was down from US$4.79 billion, or $1.34 per share, on US$19 billion in revenue in the first quarter of 2007. But it is above the average analyst forecast of 64 cents a share, according to Thomson Financial.

JPMorgan agreed to buy Bear Stearns last month with the backing of the US government for US$10 a share.

As of Monday, JPMorgan had built its stake in the Wall Street firm to 49.8 per cent, according to a regulatory filing - practically guaranteeing the deal will happen.

During a conference call, JPMorgan CEO Jamie Dimon said it was not yet clear how many jobs will be lost as Bear Stearns gets absorbed into JPMorgan.

"There are going to be headcount reductions at both," Dimon said. But, he added, that "we're going to do everything we can" to find jobs for those dislocated by the deal.

Dimon also said in a statement that the bank expects the economy to stay weak and the credit markets to remain under stress.

"These factors have affected, and are likely to continue to negatively impact, our firm's credit losses, overall business volumes and earnings Ñ possibly through the remainder of the year, or longer," Dimon said.

"However, we are prepared to manage through this down part of the economic cycle, given the strength of our liquidity, credit reserves, capital and operating margins, and to successfully position our company well for the future."

Since the collapse of the mortgage market began slamming the banking industry last summer, JPMorgan has not been shielded from losses, given its large warehouse of various types of mortgages, home-equity loans, and loans used to finance leveraged buyouts.

JPMorgan did not get involved in the now-troubled business of option payment adjustable-rate mortgages. Still, its results showed charge-off rates rising for home equity loans, subprime mortgages, auto loans and credit cards.

The bank's US$5.1 billion in total provisions included US$4.4 billion for consumer-managed loans.

The rest was for leveraged loans, which are loans to companies already holding considerable debt.

The bank said it still had US$22.5 billion in leveraged loans on its books at end of the first quarter.

Compared to its peers, though, the bank has remained healthy.

Goldman Sachs analyst William Tanona wrote in a research note that JPMorgan "appears to be managing the credit storm very well, and management continues to be relatively conservative, adding meaningfully to reserves each quarter."

AP