jpmorgan chase Despite $5.8B loss, bank reports $5B profit
By Jamison Cocklin
JPMorgan Chase released its second-quarter earnings Friday, reporting a profit of $5 billion, despite a $5.8 billion trading loss within its chief investment office in May.
All eyes were on JPMorgan Chase, one of the world’s largest financial-services companies, as it was the first major bank to release it second-quarter results. In May, after it was revealed the company incurred a stifling multibillion-dollar trading loss on a botched credit position, the company saw its market value plummet.
Friday afternoon, shares were trading at around $36 on the New York Stock Exchange.
JPMorgan, the holding company of Chase bank, which operates 328 locations throughout Ohio, reported gains in some of its portfolios.
“Importantly, all of our client-driven businesses had solid performance, said Jamie Dimon, the bank’s chief executive, in a statement released shortly after earnings were reported.
Consumer and business banking had average total deposits that were up 8 percent, with a profit of $946 million, on net revenue of $4.3 billion. Still, overall consumer and business banking profits and revenues were down by 14 percent and 6 percent respectively, compared with the same quarter last year.
Business banking loans were $18.2 billion, up 6 percent from the prior year, and loan originations stood at $1.8 billion, an increase of 14 percent from 2011.
Chase banks employed 21,000 Ohioans in 2010, the latest year for which regional data is available. During the same year, the banks made 660 new loans and credit lines to consumers and small businesses throughout the state. Chase made $3.5 billion in Ohio home loans in 2010.
JPMorgan also reported Friday that its commercial-banking wing reported eight consecutive quarters of loan growth, up 16 percent from 2011.
Commercial banking for the company earned profits of $673 million during the second quarter, on net revenue of $1.7 billion.
Credit-card sales volume was up 12 percent over last year, but branch sales dropped 19 percent from 2011.
At the same time, JPMorgan’s mortgage production and servicing, as well as its real-estate portfolios, made strong gains from 2011. Mortgage loan originations were $43.9 billion, an increase of 29 percent, and loan-application volumes ticked up by 37 percent.
The company also reported profits of $717 million on its real-estate portfolios, a marked change from last year when they suffered a loss of $66 million. Net revenue, however, decreased by 15 percent to $1 billion, $177 million less than the prior year. The decrease was driven largely by a decline in net-interest income from lower-loan balances in the real-estate portfolio.
In all, JPMorgan earned $1.21 a share during the second quarter, beating analysts who forecast a per-share profit somewhere around 70 cents.
On the other hand, JPMorgan revealed in May that it lost $2 billion on its botched trade, but that figure was specifically revised Friday to $4.4 billion.
Furthermore, revenue fell in the second quarter to $22.9 billion, down 16 percent from $27.4 billion a year ago.
Net income also fell, to $4.96 billion, from $5.4 billion a year ago.
The bank also might restate its first-quarter earnings over concerns that traders at the bank misstated positions in an effort to reduce certain losses.