JPMorgan Chase, the Wall Street bank which last month rescued its rival Bear Stearns from collapse, today reported a halving of first-quarter profits and warned the credit crunch was far from over.

Chief executive Jamie Dimon said: "Our expectation is for the economic environment to continue to be weak and for capital markets to remain under stress. These factors have affected, and are likely to continue to negatively impact, our firm's credit losses, overall business and earnings, possibly through the remainder of the year or longer."

His comments contrast strongly with those of Lehman Brothers chief executive Richard Fuld, who yesterday told shareholders that "the worst is behind us" in the credit squeeze that has cost the US's biggest banks and brokerages nearly £125 billion.

Dimon said: "Our earnings this quarter were down significantly as market conditions and the credit environment remained challenging."

The investment banking arm had markdowns and writedowns totalling $2.6 billion (£1.3 billion) on leveraged lending, collateralised debt obligations and other subprimerelated assets.

That is double the $1.3 billion of writedowns the bank announced for the whole of 2007. At the same time first-quarter provisions for losses in its retail business soared from $292 million to $2.5 billion with $1.1 billion relating directly to mortgages, which suggests that the US housing market is far from out of the woods yet.

These losses are directly on home loans, not on fancy esoteric financial instruments in the investment bank.

Net profits for the first quarter fell from $4.8 billion to $2.4 billion.

Merrill Lynch tomorrow and Citigroup on Friday are expected to announce huge additional writedowns, which analysts believe could total as much as $17 billion.