JPMorgan Chase beats the consensus despite the deterioration of credit

JPMorgan Chase has exceeded expectations by announcing an increase of 36% of its quarterly earnings, boosted by strong performance of the investment bank, but warned that the quality of consumer credit was deteriorating faster than expected.

Quarterly net income amounted to 2.72 billion against two billion a year earlier. Net banking income (GNP) jumped 41% to 27.71 billion.

Earnings per share (EPS), however, fell to 28 cents against 53 cents last year, reflecting an increase in the float.

Reuters Estimates consensus EPS gave four hundred and a GDP of 25.91 billion.

EPS includes a charge of 27 cents related to a refund of the Troubled Asset Relief Program (TARP) and another of 10 cents related to a program of the federal guarantee of deposits (FDIC). JPMorgan in June repaid $ 25 billion of loans under the Tarp.

Although the second U.S. bank is generally considered one of the most solid of the country, the amount of reserves to cover credit losses more than doubled last year to 9.7 billion dollars (6.6 billion euros).

The second quarter results benefited from the improvement in the credit markets and the measures taken by the authorities to maintain the lowest cost of money, which favored credit.

CREDIT CARDS IN THE RED

The CEO of the group, Jamie Dimon, has managed to escape the worst of the credit crisis, avoiding losses and impairment losses on complex financial products that have sealed its competitors.

A 14h06 GMT, the share of JPMorgan fell 2.0% while the KBW bank index lost 1.6% in the same time.

During a conference call with journalists, Dimon said he was unlikely that the bank make a profit in 2010 on the activities of credit card and increases its dividend before the start of next year.

The Director General has, however, estimated that the reserves for losses on receivables approximates their ceiling "and a slight stabilization of failures was observed.

The benefits of the investment bank more than tripled to 1.47 billion and revenues jumped 33% to 7.3 billion, of which 2.24 billion, a record for commissions and 4.93 billion in bond trading.

The activities of credit cards showing on the other hand a loss of 672 million. The bank has revised up its estimates of losses in this sector and anticipates a loss rate of 10% for this quarter.

The benefits of retail banking has almost evaporated, falling to 15 million against 503 million a year earlier because of rising defaults on loans, especially real estate.

JPMorgan is the only one of six major U.S. banks have not experienced a single quarter in the red since the start of the recession in 2007.

"JPMorgan's performance relative to the overall consensus is more unequal than that of Goldman Sachs but it is clear that the bank has succeeded rather well in the trading sector and less on the mortgage and individuals," said Peter Dixon, economist at Commerzbank.

Before JPMorgan, Goldman Sachs released Tuesday the results above expectations. However, Bank of America and Citigroup, the main competitors of JPMorgan, could do less well on Friday.