NEW YORK (Reuters) - JPMorgan Chase & Co warned that up to 41 percent of its more credit-worthy home equity borrowers will owe more than their homes are worth by the end of 2010, up from 27 percent at the end of 2008.
At an investor presentation on Thursday, the second-largest U.S. bank said it expects losses of $1 billion to $1.4 billion in each quarter this year from such lower-risk home equity loans because house prices are falling.
It said 35 percent to 39 percent of its "non-credit-impaired" home equity borrowers may owe more than their homes are worth at the end of 2009, and the rate could reach 36 percent to 41 percent by the end of 2010.
The projections exclude the impact of JPMorgan's September purchase of Washington Mutual Inc's
Retail banking chief Charlie Scharf said losses on loans made as the housing boom was cresting "seem to be leveling out, at very high rates.
"There will be an end in sight, just figuring out where it is is not the easiest thing as we sit here today," he said.
He also said California's housing market is showing signs of a bottom in housing price deterioration, but Florida is not. Scharf added that "we know New York is going to deteriorate."
Separately, JPMorgan said it expects to open 120 new retail branches this year, even as it cuts a net $2 billion of costs tied to Washington Mutual.
The bank expects a total of 12,000 job cuts from the time the merger was announced. In December it projected 9,200 cuts at the workforce of Washington Mutual alone.
JPMorgan maintained its first-quarter outlook for a 7 percent net charge-off rate in its card services business.
In morning trading, JPMorgan shares were up $1.97, or 9 percent, at $23.70 on the New York Stock Exchange. JPMorgan slashed its common stock dividend 87 percent on Monday.
(Reporting by Jonathan Stempel; editing by John Wallace)
