JPMorgan earns $3.6 billion, but loan losses remain high

JPMorgan Chase & Co. reported strong third-quarter earnings Wednesday as its thriving investment banking business more than offset rising loan losses that the bank warned would continue for the foreseeable future.

JPMorgan, the first of the big banks to report earnings for the July-September period, reported a profit of $3.59 billion, compared with $527 million a year earlier.

But the bank also roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter.

The bank’s earnings cheered investors, who sent JPMorgan stock up $1.50, or 3.3%, to $47.16. Still, the bank’s performance shouldn’t be taken as a forecast for how well other banks did during the quarter.

Banks including JPMorgan have predicted for some time that their loan losses would keep rising.

And in JPMorgan’s earnings statement, Chief Executive Jamie Dimon confirmed that this trend was continuing.

“Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios,” Dimon said.

Investors didn’t seem troubled by JPMorgan’s dim credit outlook, and probably were more focused on the big profits in divisions such as investment banking that helped the bank earn 82 cents a share during the quarter. Analysts had forecast a profit of 52 cents a share.

JPMorgan said its investment bank net income came to $1.92 billion, up $1 billion from a year earlier as fixed income trading thrived.

JPMorgan’s provision to cover losses on consumer loans rose to $3.8 billion, while its provision for credit card losses surged to $4.97 billion.

Overall, JPMorgan generated $28.78 billion in revenue during the quarter, better than the $24.96 billion predicted by analysts.