JPMorgan Earns $5B Profit in Q2, Loses $4.4B on Trades

JPMorgan Chase & Co. (NYSE:JPM) announced the second quarter results on Friday, reporting the net profit of $5 billion or $1.21 per share, which is 9 percent down from the same quarter a year ago. Overall, the revenues in April-June quarter stood at $22.9 billion. Last year, the bank’s second quarter turnover was $27.4 billion turnover with a net profit of $5.4 billion.

Though revenues and net profits have fallen in the second quarter this year, they are much better than what analysts had estimated. Analysts were expecting $0.90 earnings per share. The bank reported strong earnings despite continued losses from disastrous trading fiasco in its London office. The losses suffered from so-called “London Whale” were $4.4 billion, more than double of $2 billion estimated by the bank’s CEO Jamie Dimon in May.

Jamie Dimon commented on financial results, “Importantly, all of our client-driven businesses had solid performance. However, there were several significant items that affected the quarter’s results – some positively; some negatively. These included $4.4 billion of losses on CIO’s synthetic credit portfolio, $1.0 billion of securities gains in CIO and a $545 million gain on a Bear Stearns-related first-loss note, for which the Firm now expects full recovery.”

The Bank Will Restate First Quarter Earnings

About an hour before announcing second quarter results, JPMorgan Chase & Co. (NYSE:JPM) said it would restate the first quarter earnings due to concerns that bank traders in chief investment office might have lied about their deteriorating bets in an attempt to reduce the losses. After the restatement, first quarter net income is likely to fall by $459 million.

Mr. Dimon said, “CIO will no longer trade a synthetic credit portfolio and will focus on its core mandate of conservatively investing excess deposits to earn a fair return. CIO’s $323 billion available-for-sale portfolio had $7.9 billion of net unrealized gains at the end of the quarter.”