JPMorgan Chase (NYSE:JPM) recently reported fourth-quarter and full-year results that indicated 2009 marked a stunning and rapid reversal from the height of the credit crisis. A further investigation of the results demonstrate that there is still work to do in terms of returning fully to form in its traditional banking operations, but the share price multiple off normalized earnings is compelling.

IN PICTURES: 6 Major Credit Card Mistakes

Fourth-Quarter Highlights
Reported net revenue grew 34% to $23.2 billion. Subtracting out $12 billion of non interest expenses led to a pre-provision profit of $11.2 billion, which JPMorgan believes is a good indication of its potential, once provisions for credit losses amounting to $7.3 billion are factored in, resulting in $3.3 billion in net income or 74 cents per diluted share.

Results at the investment banking operations were strongest, reporting net revenue of $4.9 billion and $1.9 billion in net income on a 38% increase in investment banking fees and 66% jump in equity underwriting fees. Provisions for credit losses also fell sharply, and return on equity was 23% as the unit rivals competition from large investment banks, including Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) with top rankings in a number of debt and equity underwriting categories.

Retail financial services and card services continued to reel from hefty credit loss provisions, even as net interest margins grew and benefited from a steep yield curve, and ability to profit from them spread between short- and longer-term interest rates. The managed charge-off rate jumped to 9.33%, but fell sequentially from 10.30% last quarter, indicating that consumers with credit card balances are struggling less as the economy improves.

The remaining businesses, including commercial banking, treasury & securities services, and corporate/private equity, posted a mixed bag of results on further credit loss provisions, losses in the bank's own private equity, gain in the investment portfolio and less of a need for treasury management services now that the credit crisis has subsided. Asset management revenue and profits did see a boost from a higher stock market and addition of businesses from Bear Stearns.

Full-Year Results
The company reported extreme growth in net revenue of 49% for the full year and on a per-quarter basis of 34%, compared to last year, as the addition and integration of Bear Stearns and Washington Mutual boosted the top line. Strong investment banking profits and gains in its own investment portfolio boosted the bottom line as full-year net income came in at $11.7 billion, or $2.26 per diluted share.

The Bottom Line
JPMorgan's fourth-quarter earnings handily beat analyst earnings projections, but the shares traded down on concerns over the outlook for the core consumer and traditional banking operations that also continue to haunt money center rivals Bank of America (NYSE:BAC) and CitiGroup (NYSE:C). Indeed, the investment banking an investment portfolio gains are the two most volatile units, and can't be counted on for consistent profits going forward. (For a brief history on J.P Morgan, read The Kingpin Of Wall Street: J.P. Morgan.)

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