J.P. Morgan Chase & Co. today reported 2006 first-quarter net income of US$3.1 billion, compared with US$2.3 billion for the first quarter of 2005.

“Our earnings in the first quarter reflected positive momentum across the firm,” said Jamie Dimon, president and CEO, in a news release.“Our businesses generally experienced underlying growth in customer accounts, loans, deposits, assets under management, and business volumes from new and existing clients. Additionally, the Investment Bank had strong fee income and improved trading performance. We are also pleased to see the progress in the Corporate segment’s results.”

Investment banking net income of US$850 million was driven by record quarterly revenues of US$4.7 billion. Net income declined 36% compared with the prior year due to an increase in the provision for credit losses related to higher loan balances, incremental expense from the adoption of new accounting rules and higher performance-based compensation. Net income was up 27% from the prior quarter.

Investment banking fees of US$1.2 billion were the highest since 2000, up 19% from the prior year. Advisory fees of US$389 million, up 48% from last year, were also the highest since 2000. Debt underwriting fees of US$569 million were up 18% from the prior year, driven by record loan syndication fees offset partially by lower bond underwriting fees.

However, equity underwriting fees of US$212 million were down 11% from the prior year, reflecting lower market share. Fixed Income Markets revenue of US$2.0 billion was down 13% from the prior year due to weaker performance in commodities and rates markets, partially offset by stronger results in emerging markets, currencies and credit markets. Equity Markets produced record revenues of US$1.2 billion in the quarter driven by record trading and strong commissions across all regions. Credit Portfolio revenues of US$321 million were down 8% from the prior year.

In retail financial services, net income of US$881 million was down by US$107 million, or 11%, from the prior year. Net revenue of US$3.8 billion was down by US$84 million, or 2%, from the prior year.

Card Services saw net income of US$901 million, up by US$379 million, or 73%, from the prior year. The results for the quarter reflected a pre-tax benefit of US$550 million, which is based on an estimate by management of the impact of lower bankruptcies following the new bankruptcy legislation that became effective in the fourth-quarter of 2005. Results were also driven by lower credit losses (excluding the impact from the bankruptcy legislation), merger savings and higher loan balances, including the acquisition of the Sears Canada credit card business. These benefits were offset partially by narrower spreads on loans and higher marketing expense. Net revenue was US$3.7 billion, down by US$94 million, or 2%, from the prior year.

Commercial bank net income was US$240 million, up by US$9 million, or 4%, from the prior year and down by US$39 million, or 14%, from the prior quarter. Net revenue was US$900 million, up by US$73 million, or 9%, from the prior year.

Net income was a record US$312 million is the Treasury & Securities Services division, up by US$58 million, or 23%. Net revenue of US$1.7 billion was up by US$179 million, or 12%.

Asset & wealth management net income was US$313 million, up by US$37 million, or 13%, from the prior year. Net revenue was US$1.6 billion, up by US$223 million, or 16%, from the prior year. This increase was due primarily to net asset inflows, mainly in equity-related and liquidity products; global equity market appreciation; and higher placement and performance fees.

The corporate division’s net loss was US$416 million compared with a net loss of US$1.3 billion in the prior year. In comparison to the prior year, private equity earnings were US$103 million, down from US$437 million; treasury net loss was US$270 million compared with a net loss of US$828 million; and the net loss in other corporate was US$249 million compared with a net loss of US$944 million.

Commenting on the recent agreement to purchase the Bank of New York’s retail and middle market banking businesses in exchange for the firm’s corporate trust business, Dimon remarked, “We are excited by the unique opportunity to add US$15 billion in deposits, over 300 branches, and 400 ATMs to our New York City/Tri-State franchise. This acquisition will allow us to create an unparalleled platform that would have taken many years to build. We also remain committed to our processing and securities services businesses, which have important linkages to our other businesses and clients.”