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JPMorgan reports sharp rise in criticized oil-and-gas loans


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JPMorgan reports sharp rise in criticized oil-and-gas loans

JPMorgan Chase& Co.'s exposure to the oil-and-gas and natural gas pipelinesindustries climbed $1.5 billion in the first quarter, reaching $47.9 billion atMarch 31.

The company broke out its wholesale credit exposure byindustry in its latest quarterly filing. The total criticized component of theportfolio, excluding loans held-for-sale and loans at fair value, was $21.2billion at March 31, compared with $14.6 billion at year-end 2015. JPMorganattributed the increase to downgrades within the oil-and-gas and natural gaspipelines portfolios, and in the metals and mining portfolio.

In the oil-and-gas portfolio, criticized performing loansrose to $8.03 billion at March 31 from $4.26 billion the previous quarter,while criticized nonperforming loans climbed to $1.71 billion from $277 million.

JPMorgan's exposure to the oil-and-gas and natural gaspipelines industries was approximately 5.8% of overall company-wide wholesaleexposure as of March 31 and year-end 2015; and 21% of the exposure to theseindustries was criticized.

The company estimated that its exposure to commercial realestate in parts of Texas, California and Colorado that are deemed sensitive tothe oil-and-gas industry was about $4 billion as of March 31. JPMorgan said itcontinues to monitor its exposure as well as potential spillover effects intoother industries and geographies.

The company expects total net charge-offs of up toapproximately $4.75 billion in 2016, driven higher by loan growth and increasedcharge-offs in the oil-and-gas portfolio.

On the legal front, JPMorgan said its legal expense for thefirst quarter was "not material." By comparison, legal expense was$687 million for the three months ended March 31, 2015.

On April 13, JPMorgan reported first-quarter net income applicable to commonstockholders of $4.99 billion, or $1.35 per share, compared to $5.45 billion,or $1.45 per share, for the same period in 2015. The bottom line suffered a13-cent-per-share hit from wholesale credit costs.