JPMorgan Chase, the nation's largest bank by assets, said Friday its third-quarter earnings jumped 34 percent as it benefitted from an increase in mortgage lending.
The bank said its net income was a record $5.71 billion, or $1.40 a share, in the quarter, up from $4.26 billion, or $1.02 a share, a year earlier. Results for both periods included special items.
Revenue from mortgage production was $1.8 billion, up 36 percent from a year earlier, excluding losses for buying back bad mortgage loans sold in the past to investors.
“We believe the housing market has turned the corner,” JPMorgan’s Chief Executive Jamie Dimon said in a statement.
U.S. banks have been enjoying a surge in demand from homeowners to refinance mortgage loans at lower interest rates.
Another major U.S. bank, Wells Fargo, on Friday reported higher third-quarter profits on a surge in mortgage lending.
The fourth biggest U.S. bank said net income was $4.9 billion, or 88 cents a share, in the quarter, up from $4.1 billion, or 72 cents a share, in the same period a year earlier.
Wells is the largest U.S. mortgage lender.
The profit jump at JPMorgan came even as the company said it recorded a “modest loss” in the third quarter on its so-called “London whale” derivatives portfolio, which had lost $5.8 billion this year through June.
In mid-May, the bank announced it had sustained a huge loss that originated in its London office due to a failed hedging strategy undertaken by Bruno Iksil, nicknamed “The London Whale” because of the size of the trading positions he took.
JPMorgan said Friday it may lose about $300 million more in the fourth quarter.
On Thursday, the News York Times reported the Federal Bureau of Investigation is reviewing taped phone conversations to build criminal cases related to the multibillion-dollar trading loss at JPMorgan Chase revealed earlier this year.
Investigators are looking into the actions of four people who previously worked for the team based in London responsible for the losses at the bank, the Times said.
The probe is focused on telephone calls in which JPMorgan employees openly discussed how to value the troubled bets in a favorable way, the report said.
The phone recordings were handed over to officials by the bank. Investigators are also looking at notes that employees took during staff meetings, instant messages circulated among traders and e-mails sent within the group, the paper reported.
The FBI could make some arrests related to the case in the next several months, the paper reported.
JPMorgan’s CEO Dimon, who faced questions from lawmakers in June over the losses at the bank’s London office, said Wednesday that the bank made “a stupid error” by allowing the a derivatives trader to saddle the bank with a multibillion-dollar loss.
“I should have caught it ... I didn’t,” he said in an interview in Washington at the Council on Foreign Relations.
Reuters contributed to this report.
