JPMorgan Chase Earns $3.6B; Losses High

(NEW YORK) — 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 $3.59 billion profit but also said it roughly doubled the amount of money it set aside for failed home and credit card loans in the quarter. See which businesses are bucking the recession.

The bank's earnings cheered investors, who sent JPMorgan stock and the overall market higher. Still, the bank's performance shouldn't be taken as a forecast for how well other banks did during the quarter. Many financial companies don't have such big investment banking operations, which includes trading of stocks and bonds and allowed JPMorgan to overcome its loan losses.

Banks including JPMorgan have predicted for some time that their loan losses would keep rising. And in JPMorgan's earnings statement, CEO Jamie Dimon confirmed that this trend continues. "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.

In its earnings statement, the bank also described the near-term path of the economy as uncertain.

The company said for the second straight quarter that there are some signs of stabilization in delinquencies among consumer loans that are only recently past due. But Chief Financial Officer Mike Cavanagh said during a conference call with reporters that the bank "can't at the moment be certain" that the trend will continue. Read "How to Know When the Economy Is Turning Up."

JPMorgan may be able to raise its 5 cent per share quarterly dividend to as much as 25 cents if loan losses stabilize and the company's credit costs fall, Cavanagh said. The CFO said that an increase could come early next year, but he again cautioned that's it too soon to know if the economy will recover enough to make a higher dividend possible.

Investors didn't seem troubled by the bank's dim credit 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.

JPMorgan said its investment bank net income came to $1.92 billion, up $1 billion from a year earlier as fixed income trading thrived. The company's stock jumped $1.69, or 3.7 percent, to $47.35 in midday trading.

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