A Dip Into J.P. Morgan's Cookie-Jar Quarter
Investors in J.P. Morgan Chase had a whale of a time Friday as the bank's shares surged. But its earnings showed yet again why investing in big U.S. banks can be so frustrating.
The bank's nearly $5 billion, second-quarter net profit blew past expectations. And it seemed to validate chief James Dimon's assertion that J.P. Morgan would be "solidly profitable" despite the trading debacle that led to $5.8 billion in losses in the first half, of which $4.4 billion hit in the second quarter.
At the same time, Mr. Dimon said the bank has put behind it most of the issues related to its Chief Investment Office. J.P. Morgan said maximum future losses from the unit's botched trades could range from $800 million to $1.6 billion, but that the upper end represented a worst-case scenario and that the remaining positions could even end up making money from here.
Though markets cheered, J.P. Morgan's shares are still down more than 15% since the bank announced the CIO problem in early May and about 9% over the past year. Meanwhile, even with Friday's gains, the stock trades only a touch above tangible book value.
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