JPMorgan Chase & Co will write down the value of mortgage-backed assets by at least US$1.5 billion this quarter after credit-market turmoil and the US housing slump deepened.
Trading conditions “have substantially deteriorated” since last month and “sharply widened” spreads on losses caused by mortgage-backed securities and loans, the second-biggest US bank by market value said in a regulatory filing late on Monday.
“The global credit market hasn’t much improved,” said Tim Leung, who oversees about US$1.5 billion at IG Investment Ltd in Hong Kong. “The risk aversion to lending to financial institutions is still high and everyone is still very cautious.”
JPMorgan chief executive officer Jamie Dimon has presided over more than US$12 billion in writedowns, losses and credit provisions on mortgage-tainted assets through the second quarter.
US bondholders raised yields for financial companies to the highest levels relative to Treasury notes in at least a decade as bank losses and writedowns on debt securities reached almost US$500 billion since the subprime-mortgage market meltdown began last year.
The bank held US$16.3 billion in legacy-leveraged loans and unfunded commitments as of June 30, and US$11.6 billion in commercial mortgage-backed securities, the filing showed.
JPMorgan wrote down the value of leveraged loans and mortgage-related assets by US$1.1 billion in the second quarter, according to data compiled by Bloomberg.
It expects the global economy “to continue to be weak, for capital markets to remain under stress and for a continued decline in US housing prices,” the filing said. “These factors have affected, and are likely to continue to adversely impact, the firm’s credit losses, overall business volumes and earnings.”
US banks have tightened lending terms on all major loan categories over the previous three months, the Federal Reserve said in its quarterly survey on Aug. 11. Losses from the collapse of the subprime-mortgage market have caused money-market funds to stop buying asset-backed commercial paper and forced funds to unwind holdings, driving up yields.
JPMorgan’s second-quarter net income fell 53 percent to US$2 billion on mortgage-related writedowns and costs from the takeover of Bear Stearns Cos. It marked down the value of loans promised to fund last year’s buyouts by US$0.20 on the dollar last quarter.
Dimon, 52, said in a statement that accompanied the earnings last month that while a weakening economy means financial markets will remain “under stress,” the New York-based company’s capital position is strong. JPMorgan’s decision last year to expand in mortgages was “wrong,” he said.
Home prices in 20 US metropolitan areas dropped 15.8 percent in May, the biggest decline since record keeping began in 2001, according to the S&P Case-Shiller Home-Price Index.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source