Profits soared by 34% at JP Morgan and James Dimon the company CEO said he believes a corner has been turned in the housing market. Part of the gains in the home-loan business at the company included a release of $900 in the loan-loss reserves. That reflected the opinion that further defaults in the unit would be much lower.
The largest bank in the nation by assets said it had closed out the London Whale trade that had led to over $6 billion in losses and effectively tarnished the sterling reputation of the company for risk management.
The company, based in New York, said its net income jumped to $5.71 billion equivalent to $1.40 per share from $4.25 billion or $1.03 per share last year. Included in the latest period was four cents per share in net benefits that was attributed to the release of loss-reserve and the extraordinary gains received on securities redemptions.
Analysts at Wall Street had expected JP Morgan to have earnings at around $1.20 per share. Revenue was up 6% over last year to over $25.9 billion, which followed a number of year-to-year declines. JP Morgan cited gains in consumer banking deposits, asset management fund flows and credit card sales.
JP Morgan shares were up 35 cents during premarket trading on Friday to $42.45. This is the first time that shares have been above $42 since last May when the London Whale losses became known.
The results from JP Morgan kicked off another round of reporting for banks in the U.S. The quarter is expected to have stronger numbers than the same quarter a year ago, due in part to revenues from mortgages and capital markets.