There's no easy way to put it. JPMorgan Chase & Co.'s earnings took a hit this morning. Even if you don't strip out the accounting adjustment on the value of the bank's debt, which boosted profit, its bottom line still lost the momentum gained over the past few quarters.
That's obviously rattling markets, because JP Morgan was the first of the big U.S. banks to report. Now no one knows what to expect from the others.
Yet on the earnings conference call, chief executive officer Jamie Dimon offered up some glimmers of hope. Lending to small businesses is up 71 per cent from this period last year, totalling $12.6-billion (U.S.). Mr. Dimon referred to that as a "booming, shocking" figure, according to the Financial Times.
"It looks like the recovery's still here folks," Mr. Dimon said, alluding to the fact that small businesses drive the U.S. economy, and they're taking on debt to expand.
On the other end of the spectrum, the investment banking unit reported a profit of $1.6-billion, down from the $2-billion last quarter, but up 27 per cent from the quarter earlier.
With the fiscal year end coming to a close, everyone is wondering what that will mean in terms of layoffs and bonuses. Mr. Dimon said there would be some attribution, but nothing major, and compensation will stay 35-to-40 per cent range.
As for the mortgage department, troubles persist. JP Morgan incurred a $1-billion legal expense fee last quarter and has hired many more workers to work through all of the foreclosures.
Tim Kiladze