JPMorgan profit climbs as trading gains outweigh mortgage drop

Job Cuts

Lenders have been cutting staff and reducing expenses in response to slowing global growth and historically low interest rates, which compressed profit margins on lending as well as yields on investments.

JPMorgan is eliminating as many as 19,000 jobs in its mortgage and community-banking divisions through 2014 as Dimon trims expenses, the firm said in February. Employing about 259,000 people at the end of December, JPMorgan will cut 13,000 to 15,000 jobs in its mortgage unit and 3,000 to 4,000 in community banking excluding home lending through the end of next year, the company said. The number of personnel firmwide will shrink by about 4,000 people this year.

Litigation Expenses

“We’re on track with that, but obviously given what’s going on in the market, there could be some acceleration,” Lake said today on a conference call with journalists.

Fewer consumers fell behind on their credit-card payments in the second quarter compared with the same period in 2012. Loans at least 30 days overdue, a signal of future write-offs, fell to 1.69% from 2.14% in 2012. Write-offs dropped to 3.31% from 4.35% the prior year and 3.55% in the previous quarter.

JPMorgan set aside $600 million more toward its litigation costs during the second quarter.

The bank’s bet on credit derivatives in a London unit cost more than $6.2 billion in the first nine months of last year. Under regulatory orders to tighten internal controls following the loss, JPMorgan will face more sanctions in the coming months, Dimon told shareholders in a letter released April 10.

Asset Management

Revenue in asset management, which includes JPMorgan’s mutual-fund family, retirement planning, hedge funds and private bank, climbed 15% to $2.7 billion, and profit jumped 28% to $500 million. Run by Mary Erdoes, the division grew assets under management 9% to $1.5 trillion.

JPMorgan said today that its estimated liquidity coverage ratio was 118%, topping the proposed minimum of 100%. The Basel Committee on Banking Supervision’s standard, scheduled to be phased in starting in two years, requires banks to hold enough “high-quality liquid assets” -- predominantly cash and government debt -- to survive 30 days of stress. Lake said in April that the firm fell short of the standard in the first quarter and vowed to be compliant by the end of this year.

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