JPMorgan reports fall in demand for loans

The news was not all positive for the second-largest US bank. It said it was still suffering from high mortgage losses.

The bank’s book of consumer loans shrank by 10 per cent in the quarter, and loans to corporate customers did not rise enough to offset that.

JPMorgan is the first of the big US banks to post quarterly results, and its earnings often give investors a hint of what to expect from other financial companies.

“These were good numbers. They beat estimates, but not massively. I think the financial sector generally is holding up but is not performing quite as well as we would like to see,” said Peter Dixon, an economist at Commerzbank in London.

Chief executive Jamie Dimon is often credited with skilfully piloting his bank through the financial crisis, but many investors are now looking for signs of revenue growth.

In recent quarters, the bank has boosted profit mainly by setting aside less money to cover credit losses, rather than by generating more money from new loans.

Pre-provision profit, a measure of how much the bank earns before setting aside money for credit losses, fell 20 per cent to $9.23bn.

Loans on the bank’s books fell 4 per cent to $686bn, indicating demand for loans is tepid compared with how quickly existing loans are being repaid.

“The key is loan growth,” said one market commentator. “That’s what will ultimately turn this recovery into a durable expansion, but it seems like that’s not yet happening.”

JPMorgan’s investment banking profit fell to $2.37bn from $2.47 bn a year earlier.

Merger advisory and debt underwriting revenue jumped.