J.P. Morgan Chase & Co. reported net income of US$4.8 billion for its second quarter, soaring 77% from the US$2.7 billion it registered in the second quarter of 2009.

The firm’s earnings per share tally of US$1.09, includes 36¢ due to a reduction in loan loss reserves, and a 14¢ charge for the UK tax on bankers’ bonuses. The bank said that it had solid performance across most businesses, and reduced credit costs. Tier 1 Common capital sits at US$108.2 billion, or 9.6%.

Net income in the investment bank was US$1.4 billion, down 6% compared with the prior year, reflecting lower revenue and higher non-interest expense, largely offset by a benefit from the provision for credit losses. Retail financial services generated net income of US$1.0 billion, compared with US$15 million in the prior year. Card services produced net income of US$343 million, compared with a net loss of US$672 million in the prior year. Commercial banking recorded net income of US$693 million, up 88% from the prior year. Treasury added US$292 million of income, a decrease of 23% from the prior year. Asset management’s net income was up 11% to US$391 million. The Private Equity and Corporate business had net income of US$653 million, down from US$808 million in the prior year.

Jamie Dimon, chairman and CEO of the bank, said, “Our net income increased to US$4.8 billion, including the benefit from a US$1.5 billion reduction of loan loss reserves — which we do not believe represents normal ongoing earnings — partially offset by a charge of US$550 million for the UK bonus tax.”

“Although we are gratified to see consumer-lending net charge-offs and delinquencies decline, they remain at extremely high levels and therefore returns in our consumer-lending businesses are still unacceptable. As a result, these businesses did not meet expectations nor generate satisfactory returns on capital for our shareholders. It is too early to say how much improvement we will see from here,” Dimon added.

“We saw solid performance in our other businesses. In particular, our wholesale businesses experienced reduced net charge-offs that led to reductions in loan loss reserves, and are currently seeing credit costs which reflect the increasingly healthy condition of our wholesale clients,” he said.

Looking ahead, Dimon concluded, “We recognize a number of positive aspects of the pending regulatory reform legislation, including systemic risk oversight and resolution authority. However, many challenges and uncertainties remain which may result in unintended consequences for our clients, the markets and our businesses. With a need for global regulatory coordination and hundreds of rules to be written, increased focus is critical in order to implement these reforms in a way that protects consumers and the competitiveness of the U.S. financial system, while ensuring the flow of safe and sound credit.”

IE