JP Morgan is engaged in retail banking

London shops cost billions

Overall, JP Morgan made after-tax profits of $ 4.96 billion in the second quarter of 2012, or $ 1.21 per share, which is still impressive. For comparison: In the same quarter last year it was $ 5.43 billion and $ 1.27. JP Morgan is once again proving to be the primus inter pares of American banks. While others are still shrinking because they are still busy with the reduction of legacy issues, at JP Morgan a slightly diminished but still significant profit.

The losses made by several traders on JP Morgan's London team do not total $ 2 billion, as CEO Jamie Dimon said in May, but a total of $ 5.8 billion. 1.4 billion of that was posted in the first quarter, 4.4 billion now in the second quarter. There remain uncertain positions of about a billion dollars.

Jamie Dimon, who had made a name for himself again and again as a regulatory critic, had to admit in advance that the control mechanisms of his bank had failed. Shareholders will leave him behind given the profits that remain. One of them definitely does. Investor Warren Buffett advises Dimon:

"Be careful, you have a fantastic bank, you make money every day. And hope that you don't get into this kind of situation too often in your career."

CLSA analyst Mike Mayo says the size of financial institutions is partly responsible for such speculation:

"The size of the loss is not so much the problem. The question is why they didn't notice it faster. And that begs the question, are these big banks perhaps too big to be able to manage, regulate and understand them."

But, as the sustained profits of JP Morgan show: the bank is broadly positioned, the lull in investment banking and the hole caused by the billions in bad speculation are being ironed out by the private customer business and asset management.

The euro debt crisis and the associated ups and downs in the markets will continue to reduce profits - in addition, consumer and business credit demand will remain subdued due to the uncertain economic environment.

In contrast, there are positive signs in the credit card business. Payment defaults in the US are at their lowest level in 20 years. The bank was able to release part of its risk provisioning and thus improve its quarterly result. And customers are hesitant to spend more as the US consumer confidence index has risen.