UPDATE 8-JPMorgan beats profit forecast but revenue weak

* Q3 EPS $1.01 vs $0.90 Street view

* Credit card, retail profit jumps

* Investment banking profit down 33 pct

* Weak revenue highlights challenges facing industry

* Shares down 1.2 pct in afternoon
(Adds analyst and investor comments, CEO comments, adds link,
updates share price)

By Elinor Comlay

NEW YORK, Oct 13 (BestGrowthStock) – JPMorgan Chase & Co (JPM.N: )
reported quarterly earnings that could be difficult for banking
rivals to match, but weak revenue highlighted feeble loan
demand and declining trading volumes in the industry.

JPMorgan mostly boosted its profit by setting aside less
money to cover bad loans. Net income rose 23 percent but Chief
Executive Jamie Dimon said returns are “still not particularly
good for a company of our size.”

Like its major competitors, the second-largest U.S. bank is
struggling to find ways to boost growth in its main businesses
— consumer lending and investment banking.

“People are concerned about where the revenue growth is
going to come from,” said Keith Davies, principal and research
analyst at Farr, Miller & Washington. “I don’t think this
quarter does anything to alleviate those concerns.”

JPMorgan, the first major lender to report third-quarter
results, also faced numerous questions about the latest
headwind to batter the industry — allegations that thousands
of home foreclosures may have been illegal because they were
improperly documented. [ID:nN13242007]

A prolonged probe into foreclosure processes could damage
the fragile housing market, Dimon warned.

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Graphic on Earnings http://link.reuters.com/gyp38p

Graphic on segment results http://link.reuters.com/sas38p

Reuters Insider http://link.reuters.com/wan28p

Breakingviews [ID:nN13245773]

TAKE A LOOK-JPMorgan earnings [ID:nN13106154]

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Dimon said demand for investment banking services remained
weak.

“There continues to be a little more uncertainty out there
about both the economy and what the political landscape
entails, and so we haven’t seen a rush toward activity,” he
said on a conference call.

Small and mid-sized businesses are starting to borrow more
from the banks, but larger companies are choosing to raise
money from the capital markets, Dimon said.

Commercial deposit levels remain high as companies hoard
cash, a sign that they are wary about the future.

JPMorgan posted third-quarter net income of $4.42 billion,
or $1.01 a share, up from $3.59 billion, or 82 cents a share, a
year earlier. Analysts on average expected 90 cents a share,
according to Thomson Reuters I/B/E/S.

U.S. unemployment is hovering around 9.6 percent but does
not seem to be getting worse, which means fewer consumers are
falling behind on their credit card bills. This allowed
JPMorgan to set aside much less money to cover bad loans —
$1.6 billion in the third quarter, compared with $5 billion in
the same quarter last year.

The bank is dipping into reserves set aside for future
credit losses because regulations require it to, but “we are
taking down as little as we can … because we’re very
cautious,” Dimon said.

A TOUGH ACT TO FOLLOW

Analysts and investors said Citigroup Inc (C.N: ) and Bank of
America Corp (BAC.N: ) may have trouble matching JPMorgan’s
results when they report next week.

“JPMorgan’s headline number was great, but the revenue and
loan balances are just not giving comfort to the street that
the banks have found a firm footing,” said David Dietze, chief
investment officer at Point View Financial Services in Summit,
New Jersey.

JPMorgan said its investment banking profit fell by a third
to $1.2 billion, which could be a bad sign for rivals Goldman
Sachs Group (GS.N: ) and Morgan Stanley (MS.N: ) (Read more about the money market today. ), which report
results next week.

Fixed income trading, which fueled much of 2009’s gains in
investment banking revenue, posted a 38 percent decline in
revenue. Wall Street trading profits are widely expected to
fall this quarter.

JPMorgan’s net revenue was $23.8 billion, below analysts’
average estimate of $24.64 billion.

The bank’s shares were down 0.5 percent to $40.28 in midday
trading. Bank of America shares were down 1.2 percent at $13.36
on the New York Stock Exchange on Wednesday afternoon.

MORTGAGES

Dimon said he expects mortgage losses to remain high for
the next several quarters and the bank has also put aside money
to cushion litigation costs.

Profit in JPMorgan’s mortgage banking and other consumer
lending businesses fell 50 percent to $207 million, even as the
bank set aside less money against loan losses in the unit.

The mortgage business is also under pressure as some
legislators push for the largest mortgage lenders to suspend
foreclosures across the United States, following allegations
that some banks used shoddy paperwork to kick struggling
borrowers out of their homes.

JPMorgan has identified some improper notarizations of
affidavits used for foreclosures, Chief Financial Officer Doug
Braunstein said in the conference call.

Dimon added, “We are pretty comfortable that at the end of
the process, foreclosure was proper.

Like its peers, JPMorgan is facing changes to its business
after U.S. financial reform passed in the summer. Worries that
regulatory changes will trim some of the bank’s most profitable
businesses have weighed on JPMorgan shares lately.

Through Tuesday JPMorgan’s shares were down 3 percent this
year, while the broader KBW Bank Index was up 12.5 percent.

As a result of financial reform, the bank last month said
it is moving about 45 traders who previously traded for its own
account into a new unit within its asset management business.
[ID:nN279993]
(Reporting by Elinor Comlay; Additional reporting by Steve
Eder; Editing by Derek Caney, John Wallace and Matthew Lewis)

UPDATE 8-JPMorgan beats profit forecast but revenue weak