JPMorgan Chase Profits Fall 9 Percent

Security personnel for Chase Bank outside their headquarters in downtown Milwaukee, Wisconsin. The Bail Out the People Movement held a demonstration there demanding a moratorium on foreclosures. (Photo: Abayomi Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.

JPMorgan Chase profits fall 9 percent

07/15/2012 6:18 AM ET
AP

JPMorgan Chase says losses from a massive trading blunder in the bank's London have reached $5.8 billion and could go as high as $7 billion.

The bank Friday said it will be forced to restate its first-quarter results after it was discovered traders may have been trying to hide the losses from botched trades, The New York Times reported.

The bank said it lost $4.4 billion within the London office in the second quarter, up from the $2 billion loss it initially reported in May.

"The firm has recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter," JPMorgan Chase said in a filing with the Securities and Exchange Commission.

The bank reported second-quarter profits of $5 billion -- down 8.7 percent from a year ago -- despite the trading debacle.

JPMorgan Chase said it earned $1.21 a share in the second quarter of 2012, down from $1.27 a share a year earlier but higher than analyst estimates.

Revenue rose to $22.9 billion, down 16 percent from $27.4 billion in the same quarter a year ago.

Jamie Dimon, chairman and chief executive officer of the bank, said it continues to maintain strong reserves and has significantly reduced its synthetic credit risk.

"Importantly, we have put most of this problem behind us and we can now focus our full energy on what we do best -- serving our clients and communities around the world," he said.

Three bankers at the center of the credit debacle involving investments in corporate credit indexes by the bank's Chief Investment Office appear to have left the company, The Wall Street Journal reported Friday.

People familiar with the company said Achilles Macris, Javier Martin-Artajo and Bruno Iksil are no longer listed in the company's internal database. Ina Drew, who headed the CIO, resigned in May.

Macris, Martin-Artajo and Iksil were stripped of their trading duties after the losses became known but stayed on to complete an internal review of what happened, the newspaper said. Iksil was nicknamed the London whale because his trades were so large they moved markets.