JPMorgan Chase profit leaps to $3.6 billion

JPMorgan Chase said yesterday its third quarter profit jumped to $3.6 billion in a further sign of the rebounding fortunes of the banking sector.

The profit however was heavily skewed to investment banking and trading results, which offset weakness in the consumer sector, especially in credit cards.

The group, among the healthiest of the major US banks, said earnings were nearly seven times higher than the $527 million in the same period a year ago.

The results translated to 82 cents per share, much better than expected by analysts, who had called for a profit of $52 million.

Revenues surged 79 per cent from a year ago to $28.8 billion, due in part of the acquisition of failed lending giant Washington Mutual.

Jamie Dimon, chairman and chief executive, said the results were positive but offered a cautious outlook.

"While we are seeing some initial signs of consumer credit stability, we are not yet certain that this trend will continue," he said.

"Despite this near-term uncertainty about the path of the economy, our strong capital position and underlying earnings power will enable us to continue to invest in our businesses, creating a lasting franchise for many years to come."

More than half the profit, or $1.9 billion dollars, came from investment banking. The company lost $700 million on credit card operations and $1 billion in consumer loans.

It also set aside $3.8 billion for credit losses, compared with $2 billion in the prior year, "reflecting continued weakness in the home equity and mortgage loan portfolios."

Commercial banking profits rose nine percent from a year ago to $341 million, and asset management earnings increased 23 per cent to $430 million.

Another big contributor to the bottom line was the corporate and private equity segment, including investment trading income. That amounted to a profit of $1.28 billion, compared with a loss of $1.78 billion a year earlier.

JPMorgan has managed to navigate the global financial crisis and maintain profitability better than most of its peers, and has expanded to become the second-largest US bank by assets.