JPMorgan Chase & Company reported record net income for third-quarter 2012 of $5.7 billion, compared with net income of $4.3 billion in the third quarter of last year. Chase's mortgage banking originations were a record $47 billion for the firm, up 29 percent compared to the totals in Q3 of 2011.
"The Firm reported strong performance across all our businesses in the third quarter of 2012," said Jamie Dimon, chairman and CEO of Chase. "Revenue for the quarter was $25.9 billion, up six percent compared with the prior year, or 16 percent before the impact of DVA. These results reflected continued momentum in all our businesses."
Spurred by favorable market conditions and higher volumes due to interest rates hovering in the 3.4 percent range and the Home Affordable Refinance Programs (HARP), Chase's mortgage production and servicing division reported a Q3 net income of $563 million, an increase of $358 million compared to the third quarter of 2011. Mortgage production reported record pretax income of $1.1 billion, an increase of $594 million from the prior year. Mortgage production-related revenue, excluding repurchase losses, was a record $1.8 billion, an increase of $475 million, or 36 percent, from the prior year. Overall production expense by the mortgage production and servicing division was $678 million, an increase of $182 million, or 37 percent, reflecting higher volumes. Repurchase losses were $13 million, compared with $314 million in the prior year and $10 million in the prior quarter.
"We believe the housing market has turned the corner," said Dimon. "In our mortgage banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the Firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default-related expense for a while longer. We are acting responsibly to help homeowners and prevent foreclosures, offering nearly 1.4 million mortgage modifications and completing 578,000 since 2009. Credit trends in our credit card portfolio continued to improve, and the wholesale credit environment remained stable."
Chase's mortgage servicing business reported a pretax loss of $159 million, compared to a pretax loss of $153 million in the prior year. Mortgage servicing revenue, including mortgage servicing rights (MSR) asset amortization, was $754 million, an increase of $57 million, or eight percent, from the prior year due to lower MSR asset amortization, largely offset by lower servicing-related revenue. MSR risk management income was $150 million, compared with $16 million in the prior year. Servicing expense was $1.1 billion, an increase of $197 million, or 23 percent, from the prior year. The current quarter includes approximately $100 million of incremental expense for foreclosure-related matters.
"I am proud of the momentum we are seeing throughout our businesses," said Dimon. "The exceptional power of our franchise is evident in the solid foundation of our fortress balance sheet and the tremendous capacity of JPMorgan Chase to support our customers and communities around the world while making significant investments for the future."