US banking giant eases worries with surge in quarterly profits

AMERICAN bank JP Morgan shrugged off fears over a tough quarter for the industry with a huge profits hike yesterday as easing pressure from bad debts offset sliding investment banking revenues.

The firm said profits jumped 78 per cent to $4.8 billion (3.1bn) in the three months to June, helped by loan losses that have halved to $2.2bn.

The profits also came despite a $550 million hit from the UK bankers' bonus tax, the bank added.

Jamie Dimon, JP Morgan's chief executive, said he was "gratified" by the signs of improvement in the consumer lending business although he warned bad debts remained at "extremely high levels". Retail banking profits recovered to $1bn from just $15m the year before.

This contrasted with a 6 per cent fall in investment banking profits, where revenues were down 14 per cent year-on-year.

Dimon said the bank continued "to aggressively do all that we can reasonably and responsibly to contribute to the economic recovery".

But with the looming prospect of tougher regulations to rein in banks and prevent a repeat of the financial crisis, he also warned against choking off a recovery.

JP Morgan has been one of the strongest performers since the financial crisis began, swallowing up ailing rival Bear Stearns as well as Washington Mutual in 2008.

But last month it was hit by a record 33.3m fine by the Financial Services Authority over its failure to ring-fence clients' money.