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JPMorgan Reports Second-Quarter Profit and Will Restate First-Quarter Figures

By JESSICA SILVER-GREENBERG


7:26 a.m. | Updated

JPMorgan Chase on Friday reported a second-quarter profit of $5 billion, down 9 percent, despite continuing losses from a multibillion-dollar botched credit position. The company also said it would restate its first-quarter earnings because it was no longer confident that the company's traders had fairly valued positions within the office that handled the controversial trades.

The bank also gave an update on the amount of money it has lost so far in credit derivatives, made by traders in London who worked in the bank's chief investment office. The bank said it has lost $4.4 billion within that office, up from the $2 billion loss it initially reported in May.

JPMorgan Chase said it earned $1.21 a share in the second quarter of 2012, down from $1.27 a share a year earlier.

Revenue rose to $22.9 billion, down 16 percent from $27.4 billion in the same quarter a year ago. Net income also fell to $4.96 billion, from $5.4 billion a year ago.

Less than an hour before reporting second-quarter earnings, JPMorgan Chase said that it would be forced to restate its first-quarter earnings because of concerns that traders within the bank misstated positions in an effort to reduce losses on a soured credit derivatives bet.

After the restatement, JPMorgan's first-quarter net income will drop by $459 million.

Jamie Dimon, the bank's outspoken chief executive, has repeatedly told investors and Congress that the bank would remain solidly profitable despite the trading blunder.

"Importantly, all of our client-driven businesses had solid performance," Mr. Dimon said in a statement.

JPMorgan still has provided no clarity about how much of the bungled trade remains. Mr. Dimon said in the statement that the chief investment office "will no longer trade a synthetic credit portfolio."

He added that the unit will refocus on its "core mandate of conservatively investing excess deposits to earn a fair return."

Revenue for the investment bank was $6.8 billion in the second quarter, down from $7.3 billion a year earlier. JPMorgan was buoyed by its retail financial services. The unit reported net income of $2.3 billion, compared with $383 million last year.

http://dealbook.nytimes.com/2012/07/13/jpmorgan-reports-second-quarter-profit-of-5-billion-down-9/?pagewanted=print