JPMorgan China chief sees fragile recovery

Special Report:Global Financial Crisis

by Ming Jinwei

BEIJING, April 21 (Xinhua) -- The latest earnings
reports of several large U.S. banking groups lend evidence to a recovery in the
global financial industry, said a senior official of U.S. banking giant JPMorgan
Chase Co.

Fang Fang, JPMorgan's China managing director and
chief executive officer, said in a recent interview with Xinhua that the
recovery was largely fragile as the financial crisis was spreading to consumer
related business in the United States.

"Generally speaking, we have witnessed some early
signs of a recovery in the financial and investment markets, but the recovery is
still fragile," he said.

JPMorgan announced last week that it earned 2.14
billion U.S. dollars for the January-March period with record revenue of
26.9billion dollars.

Fang attributed JPMorgan's solid first quarter
results to increased market activity as investors' confidence has been boosted
by a series of measures taken by the U.S. government to tackle the financial
crisis, including injecting several hundred billion dollars of funds into large
banks and other financial institutions.

He noted that JPMorgan also suffered considerable
losses at its credit card division as a rising unemployment rate and the
deteriorating economy had hampered consumers in the United States.

JPMorgan's card division recorded a loss of 547
million dollars in the first quarter, compared with a profit of 609 million
dollars the same period a year earlier.

Fang said JPMorgan's card business witnessed less
fees and rising defaults as hard hit U.S. consumers reduced the use of credit
card and failed to pay their credit card loans.

Anticipating increasing defaults on consumer related
loans, JPMorgan has increased its credit defaults provision by 4.2 billion
dollars in the first quarter to 28 billion dollars.

Besides JPMorgan, several other U.S. banking giants
also reported solid first quarter results.

Wells Fargo said earlier this month it expected to
earn 3 billion dollars in the first quarter, a record number for the company,
while Goldman Sachs announced it made a net income of 1.66 billion dollars in
the same period.

Given the fact that the financial industry usually
starts to recover six months earlier than the broader economy, Fang believed the
U.S. economy might hit the bottom and start to grow again in the second half of
this year or the first half of next year.

Citing the fact that the share prices of some Chinese
real estate companies rose some 60 percent last month in overseas stock markets,
Fang said international investors have shown more confidence in the Chinese
economy when the financial recovery was emerging.

On the lessons to be drawn from the current financial
crisis, Fang said the United States should strengthen financial regulation and
take new measures such as setting up different federal government agencies to
regulate different financial products, instead of different financial
institutions.

He also stressed the need of increasing capital
adequacy ratio for financial institutions, reducing the role of rating agencies
in financial dealings and implementing anti-cyclical measures to cushion the
devastating impact of the crisis on the whole financial system.