- The Washington Times - Friday, July 17, 2009

CHARLOTTE, N.C. | JPMorgan Chase & Co. posted a 36 percent jump in second-quarter profits that easily surpassed analysts’ expectations as strength in investment banking offset a jump in credit losses.

JPMorgan, the second big bank to report stronger earnings this week after Goldman Sachs Group Inc., earned $2.72 billion, up from $2 billion a year earlier. Revenues soared 39 percent to $25.62 billion.

Results were driven by record investment banking fees and revenue in its bond business, much like Goldman Sachs. At JPMorgan’s investment bank, revenue jumped 33 percent to $7.3 billion and profits more than tripled to $1.5 billion.

Those gains were partly offset by higher losses in consumer lending and credit cards. The bank said it set aside $9.7 billion for credit losses in the quarter, up from $4.29 billion a year earlier but down from the first quarter’s $10 billion.

CEO Jamie Dimon said that the company expects credit costs to remain high “for the foreseeable future.”

JPMorgan’s retail banking unit earned $15 million, a decrease of $488 million, or 97 percent, from the prior year. That business was affected by a higher provision for credit losses, which were offset partially by more revenue from last year’s acquisition of the thrift Washington Mutual Inc.

The profit came despite a $1.1 billion charge as JPMorgan repaid $25 billion in loans it received from the government as part of the Troubled Asset Relief Program. The bank was also hit by a 10-cents-a-share Federal Deposit Insurance Corp. special assessment penalty.

JPMorgan was among 19 major banks that underwent the government’s “stress tests” in May to determine how banks would fair if economic conditions worsened. Unlike some of its competitors, JPMorgan was told it didn’t need to raise additional capital.

JPMorgan said it extended $150 billion in new credit to consumers, corporations, small businesses, municipalities and nonprofits, and has approved 138,000 trial mortgage modifications in the quarter, bringing total foreclosures prevented since 2007 to 565,000.

Despite reporting higher earnings, JPMorgan’s shares fell 13 cents to close at $36.13 on the New York Stock Exchange, paring its gain for the year to 15 percent.

Financial shares were broadly lower as a major lender to small businesses, CIT Group Inc., teetered on the edge of bankruptcy after talks with regulators about a rescue broke down late Wednesday. CIT shares skidded $1.23, or 75 percent, to close at 41 cents after sinking as low as 31 cents earlier in the session.

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