JPMorgan shrugs off weaker bond markets; profits jump

Fri Jul 12, 2013 9:08am EDT
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By David Henry

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote) posted a 31 percent increase in second-quarter earnings on Friday after underwriting income jumped and bond market trading revenue rose.

U.S. fixed-income markets plunged during the quarter, lifting longer-term home loan rates and cutting into mortgage lending revenue. The bank said difficult market conditions might force it to accelerate cost cutting moves.

But the results beat analysts' expectations, and the largest U.S. bank said it managed to make more profit from corporate bonds and related derivatives even amid the market turmoil. Its shares rose nearly 1 percent in premarket trading.

The year-ago quarter was hurt by the "London Whale" trades, bad bets on the credit market that ultimately cost the bank more than $6 billion. In that period, the unit that held the trades booked $1.76 billion of losses. Those trades have since been switched over to JPMorgan's investment bank.

Overall, net income rose to $6.50 billion, or $1.60 per share, in the latest quarter from $4.96 billion, or $1.21 per share, a year earlier. (Graphic:

Analysts on average had expected earnings of $1.44 per share, according to Thomson Reuters I/B/E/S.

About 24 cents per share of the gains came from dipping into funds previously set aside to cover loan losses.

The bank said revenue from fixed income and equities rose 18 percent.   Continued...

A sign stands in front of the JPMorgan Chase & Co bank headquarters building in New York, March 15, 2013. REUTERS/Lucas Jackson