JPMorgan reports hefty $3.6 billion profit
While JPMorgan reported a $3.59 billion profit, it also says it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter."Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios," JPMorgan CEO Jamie Dimon said in a statement.
In its earnings statement, the bank also described the near-term path of the economy as uncertain.
Investors didn't seem troubled by the bank's dim outlook, and likely were more focused on the fact that big profits in divisions such as investment banking helped the New York-based bank earn 82 cents per share during the third quarter. Analysts forecast a profit of 52 cents per share.
The company's stock, which closed at $45.66 on Tuesday, was up at $47.35 in pre-opening trading Wednesday.
JPMorgan's loss provision to cover current and future home loan defaults jumped to $3.99 billion, while its provision for credit card losses surged to $4.97 billion.
Credit card defaults and mortgage losses are likely to continue to creep higher and lag an overall economic recovery. Losses on credit cards typically mirror unemployment, which rose to 9.8 percent in September.
Economists predict the U.S. jobless rate will eclipse 10 percent in the coming months.
JPMorgan's losses on credit cards has already passed 10 percent. The bank said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3 percent.
Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased the failed bank Washington Mutual a year ago.