NEW YORK Jan 15 Moody's Investors Service cut
the debt ratings of JPMorgan Chase & Co (JPM.N) by one notch on
Thursday, citing potential losses over the next 15 months.
Moody's cut the bank's ratings by one level to "Aa3," the
fourth-highest rating, and said the rating outlook is stable.
"The downgrades are in response to the poor prospect of JPM
generating capital in the current recession and protracted
period of market illiquidity leading to possible losses,"
Consecutive quarterly losses in the next 12 to 15 months is
possible, the rating agency said, due to potential revenue
declines from a slowing economy. JPMorgan also faces higher
charges against its $302 billion residential-mortgage portfolio
than Moody's expected in September.
Moreover, it faces the likelihood of increased credit costs
against its $185 billion credit-card portfolio, Moody's said.
Moody's placed a stable outlook on the bank's ratings as
JPMorgan maintains "prudent capital ratios, a sizable loan-loss
reserve, and enviable franchise positions in its major
businesses," Moody's said.
JPMorgan "is in a more manageable position than are its
major U.S. bank competitors to deal with the dual problems of
revenue reductions and increased credit costs," Moody's analyst
Sean Jones said in a statement. "To the extent these pressures
become more extreme, we expect JPM would defend its capital
ratios by reducing expenses and by cutting its common
(Reporting by Walden Siew; Editing by James Dalgleish)