J.P. Morgan Chase & Co. reported third quarter net income of US$3.6 billion compared with net income of US$527 million in the same quarter last year.

Overall revenue was US$28.8 billion, which is a record year-to-date, the Wall Street firm said Wednesday.

But the firm noted that credit costs remain high, as it added US$2 billion to consumer credit reserves in the quarter, bringing the firmwide total to US$31.5 billion. The firm said its Tier 1 capital ratio sits at 10.2%, and its Tier 1 common ratio is 8.2%.

“Our net income of US$3.6 billion in the quarter reflected the strong earnings power of the company, with broad-based growth across the investment bank, asset management, commercial banking and retail banking. However, credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios,” said Jamie Dimon, chairman and CEO.

In the firm’s investment banking division, net income was US$1.9 billion, an increase of US$1.0 billion from the third quarter of 2008. These results included the negative impact of the tightening of the firm’s credit spread, offset by the positive impact of counterparty spread tightening and gains on legacy leveraged lending and mortgage-related positions.

Retail banking reported net income of US$1 billion, up by US$320 million, or 44%, from the prior year. But consumer lending reported a net loss of US$1 billion, compared with a net loss of US$659 million in the prior year, and card services reported a net loss of US$700 million, a decline of US$992 million from the third quarter of 2008.

Asset management had net income of US$430 million, an increase of US$79 million, or 23%, from the third quarter of 2008, as higher net revenue and lower noninterest expense were offset partially by a higher provision for credit losses.

Net income in the corporate and private equity division was US$1.3 billion, compared with a net loss of US$1.8 billion in the third quarter of 2008. Private equity reported net income of US$88 million, compared with a net loss of US$164 million in the prior year. The corporate business had net income of US$1.3 billion, compared with a net loss of US$881 million in the prior year. Net revenue was US$2.4 billion, reflecting continued elevated levels of investment portfolio trading income and net interest income.

Net income in the commercial banking division was US$341 million, an increase of US$29 million, or 9%, from the third quarter of 2008.

Discussing the firm’s outlook, Dimon said, “While we are seeing some initial signs of consumer credit stability, we are not yet certain that this trend will continue. Despite this near-term uncertainty about the path of the economy, our strong capital position and underlying earnings power will enable us to continue to invest in our businesses, creating a lasting franchise for many years to come.”

IE