Profits at JP Morgan double as bonuses hit record level

But shares in the giant bank fell after it reported deep losses on mortgage and credit card loans in the fourth quarter and did not give investors the expected increase in their dividend.

JP Morgan – one of the strongest banks through the financial crisis – posted profits of $11.7 billion (7.2bn) for the year to 31 December – up from $5.6bn in 2008.

Pay, bonuses and benefits across the bank as a whole rose by 18 per cent to $26.9bn, with investment bankers, sales staff and traders set to make about $379,000 for 2009, on average – up more than $100,000 from 2008.

News of the profits came a day after US president Barack Obama launched plans to claw back $90bn for American taxpayers over ten years in return for support given during the financial crisis. British banks Barclays, HSBC and part-nationalised Royal Bank of Scotland are believed to face a bill of more than 6bn under Obama's scheme.

JP Morgan – which has about 15,000 staff in the UK – swallowed up failed rivals Bear Stearns and Washington Mutual in 2008. The takeovers helped to push 2009's revenues to a record $108.6bn.

The bank took $25bn from the US government at the height of the meltdown – which it has since paid back – but avoided the worst of the subprime meltdown and never posted a quarterly loss.

Chief executive Jamie Dimon yesterday said he remained "cautious" over the outlook. He said: "We don't know when the recovery is. There are some good signs out there, but we don't know. While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist."

Despite rising bad debts at its retail arm, JP Morgan's investment banking division generated almost two-thirds of its overall profits as the company benefited from stock market rallies and fundraising by major companies and governments.

Pay and benefits at the division were up 21 per cent to $9.33bn compared with the previous year, representing about a third of the investment bank's revenues.

Brendan Barber, general secretary of the Trades Union Congress (TUC), expressed outrage at the level of bonus payments.

He said: "These obscene bonuses paid so soon after the world's taxpayers had to rescue the banking system show there is something fundamentally wrong in the relationship between banking and the rest of the economy. Banks are meant to support society, but instead taxpayers' support guarantees that, whatever happens to the economy, banks will continue to pay gigantic bonuses."

JP Morgan's credit losses could indicate further trouble for Citigroup, which reports quarterly results on Tuesday, and Bank of America, which reports on Wednesday. Both banks have large consumer exposure.

Matt McCormick, portfolio manager and banking analyst at Bahl & Gaynor, said: "The logic is, as goes JP Morgan, so goes the rest of the banks."