jp morgan chase

JPMorgan profits surge six fold
Banking giant enjoy rebound in key areas such as investment banking even as consumer credit issues persist.

JPMorgan Chase's profits increased more than six fold in the latest quarter, the company said Wednesday, allowing the bank to handily beat Wall Street estimates.

Delivering its results before the opening bell, the New York-based bank said that it earned $3.6 billion during the third quarter, or 82 cents a share.

During the same period a year ago, when the company was grappling with massive writedowns, JPMorgan earned just $527 million, or 11 cents a share.

The latest results easily beat Wall Street expectations. Analysts were anticipating the company to report a profit of $2.03 billion for the quarter, or 52 cents a share, according to Thomson Reuters.

JPMorgan Chase (JPM, Fortune 500) shares gained 3% at the start of trading Wednesday.

The firm's investment banking business was one particularly bright spot in the latest quarter as profit within the division climbed to $1.9 billion, more than double what it was a year ago. Much of that was driven by a strong performance in its fixed income division.

Company CEO Jamie Dimon, who has been lauded for his efforts leading the company, acknowledged the firm's "strong earnings power." But he cautioned that the company continues to face challenges, particularly within its consumer-related divisions such as its credit card business.

"While we are seeing some initial signs of consumer credit stability, we are not yet certain that this trend will continue," he said in a statement.

During the quarter, the company said it added approximately another $2 billion to its consumer credit reserves, which dragged down results both within its mortgage lending and credit card businesses.

Both divisions reported widening losses compared to the second quarter of 2009.

Mike Cavanagh, JPMorgan Chase's chief financial officer, tempered that view however, noting that there were some encouraging signs such as stabilization of early-stage delinquencies within its credit card portfolio.

He added that the company could be close to the end of adding to its loan loss reserves if the economy continues to stabilize.

Cavanaugh also delivered some encouraging news for shareholders, noting that a dividend hike was a possibility, provided that the U.S. economy doesn't endure further weakness from here.

Earlier this year, JPMorgan Chase slashed its annual dividend nearly 87% to 20 cents a share to preserve capital. Cavanaugh suggested it may not be long before the board could raise it to 75 cents or $1 a share.

"If we are lucky that could be some time early next year," he said.

Other top-tier financial firms are slated to report their quarterly results later this week, with Citigroup (C, Fortune 500) slated to report its results Thursday and Bank of America (BAC, Fortune 500) due up Friday.