JPMorgan Chase earns $2.7 billion

By David Ellis, CNNMoney.com staff writer

Banking giant easily surpassed Wall Street's estimates for the second quarter, as investment banking performance offset consumer-related credit losses
NEW YORK (CNNMoney.com) -- JPMorgan Chase once again proved that it has been one of the better-run banks during the financial crisis after reporting quarterly results that blew past Wall Street estimates.
Buoyed by a solid performance in its investment banking division, the company said Thursday that profits in the second quarter rose 36% from a year ago to $2.7 billion, or 28 cents a share.
That profit came despite a $1.1 billion one-time reduction to earnings tied to the company's decision to repay $25 billion in government money received under the Troubled Asset Relief Program.
JPMorgan Chase chairman and chief executive officer Jamie Dimon said in a statement that he was "pleased" by the results, even as the company's latest numbers were weighed down by higher credit costs, particularly in the company's consumer lending and credit card businesses.
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The company set aside more money during the quarter to cover bad home equity, mortgage and student loans, helping to prompt a loss of $955 million in its consumer lending business. But Dimon maintained in his statement that the firm, as a result, was well poised to absorb future loan losses.
Profitability declined modestly in other areas as well, including the company's asset management arm.
But those areas of weakness were offset by the performance of JPMorgan Chase's investment banking division, which reported a profit of nearly $1.5 billion, up from $394 million a year ago.
Fees in the JPMorgan's equity underwriting business, for example, soared to a record $1.1 billion, after a number of top financial firms, including itself, issued stock as part of an effort to repay TARP funds.
Few analysts, however, were expecting the quarter to turn out so well for the bank. Consensus estimates were for the company to book a profit of $280 million, or just 4 cents a share.
Some bearish analysts even suspected that the firm might swing to a loss in the quarter, given its significant exposure to the American consumer.
Thursday's results, however, will certainly add to the ongoing debate on Wall Street as to whether the worst is indeed over for the nation's banks and if a recovery is already well underway.
On Tuesday, Goldman Sachs (GS, Fortune 500) delivered blowout second-quarter results, reporting a profit of $3.44 billion that handily beat analysts' estimates.
JPMorgan Chase (JPM, Fortune 500) shares gained modestly in pre-market trading Thursday.