JP Morgan, America's largest bank by market value, today reported an 84 per cent slump in third quarter profits and warned of falling income "over the next few quarters".

The bank, which is one of nine US financial institutions who will receive a share of the Government's ambitious bailout package, saw its third quarter profit reduced from $3.4 billion in the same period last year to $527 million, after writing off $5.8 billion.

The figures included $640 million of losses tied to the company's takeover last month of Washington Mutual, the savings and loans institution..

Jamie Dimon, chief executive of JPMorgan, said: ``Given the uncertainty in the capital markets, housing sector and economy overall, it is reasonable to expect reduced earnings for our firm over the next few quarters,''

Still, he added, "we feel well-positioned to handle the turbulent environment and, most importantly, to continue to invest in our businesses and serve our clients well.”

Since the sub-prime crisis emerged early last year, JP Morgan has written off $18.8 billion on assets and credit costs.

However, the group's running total is lower than Citigroup, the US banking giant, which has so far written off around $50 billion while JP Morgan has been able to rescue struggling rivals and earlier this year saved Bear Stearns from collapse.

JPMorgan's investment-banking division made an $882 million profit in the third quarter, compared with profit of $296 million the previous year, on revenues of $1.1 billion.

Profits at the retail bank declined from $639 million to $247 million over the same period.

The bank's credit-card division had profit of $292 million, or 63 percent below last year's period.

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