Helping offset the results was a one-time gain of $1.3 billion, related to its purchase of the failed savings and loan Washington Mutual last year. Excluding this, JPMorgan Chase said it would have reported a loss of 28 cents per share during the quarter.

Investors appeared to be encouraged by the news. JPMorgan Chase (JPM, Fortune 500) shares rose 1% in pre-market trading Thursday.

Nonetheless, JPMorgan Chase chief executive officer Jamie Dimon, who had warned about the company's lackluster performance weeks in advance, called the results very disappointing. He faulted the company's investment banking business, which suffered a net loss of $2.4 billion during the quarter.

Also contributing to the profit decline was a sharp increase in the company's loan loss reserves, which climbed by $4.1 billion during the quarter.

JPMorgan Chase's management team is working diligently to manage through this very difficult business climate, and to position the franchise to benefit when the economy eventually recovers, he said in a statement.

If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves, he said.

JPMorgan Chase is the first among the nation's biggest banks to report fourth-quarter numbers.

Citigroup (C, Fortune 500) is widely expected to report a sizable loss when it releases its results on Friday. There are reports that Citi will also unveil a major restructuring plan Friday.

Bank of America (BAC, Fortune 500) is expected to post a profit when it delivers its results next week, but there are growing concerns about how BofA will deal with losses at its recently acquired Merrill Lynch unit.

According to a Wall Street Journal report, the government is said to be working in finalizing a deal to give the bank more financial assistance to help it digest the Merrill deal.