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First quarter profits at US bank JP Morgan Chase have halved as subprime losses continue to cut into earnings.

JP Morgan reported a further write-down in its investment arm during the quarter of $2.6 billion. Net revenue in investment banking was down 52 per cent to $3.2 billion on lower fees in a weaker market, the bank added.

In the bank's retail finance division, JP Morgan recorded a $227 million loss compared to an $859 million profit last year. Reserves for home-loan losses were increased in the quarter, the bank said.

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

Mr Dimon added the agreement to buy Bear Stearns during the quarter provides a "unique opportunity".

He warned: "Our expectation is for the economic environment to continue to be weak and for the 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 volumes and earnings - possibly through the remainder of the year, or longer."

Although the decline is significant, worse results are expected from its rivals. Merrill Lynch, due to report tomorrow, is expected to announce up to $8 billion in new losses, taking its total write-downs to about $30 billion.

Prime minister Gordon Brown is in the US today to discuss the extent of the subprime crisis and find ways to improve the economic situation.