What whale? | FT Alphaville

What whale?

Only one mention of “Chief Investment Office” in JP Morgan’s Q3 earnings release.

The numbers are better than markets were expecting; shares in JPM were up about 1 per cent pre-market in New York on Friday.

And Jamie’s calling the turn in the US housing market…

Importantly, we believe the housing market has turned the corner. In our Mortgage Banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the Firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default-related expense for a while longer. We are acting responsibly to help homeowners and prevent foreclosures, offering nearly 1.4 million mortgage modifications and completing 578,000 since 2009. Credit trends in our credit card portfolio continued to improve, and the wholesale credit environment remained stable.

Indeed, housing accounted for a meaningful part of the bank’s Q3 earnings, as Tom Braithwaite notes:

But it was the simpler business of writing mortgages that helped the bank report its record profits as ultralow interest rates, spurred on in September by the Federal Reserve’s bond-buying programme, tempted homeowners to refinance existing loans or take out new ones.

Net income in retail financial services was $1.4bn, compared with $1.2bn a year earlier as the strong performance from home loans was offset by a decline in net interest margin and lower debit card fees owing to new regulations.

And here’s a slide from the bank’s earnings presentation:

Losses arising from the London Whale fiasco appear to have been stemmed, though the bank said little about it in the press release. The damage to the synthetic credit portfolio since it was transferred out of the Chief Investment Office to the regular investment bank in July amounts to just “a modest loss”.

Maybe we’ll find out more on the conference call when the analysts grill Jamie… Stop laughing.

Anyways, quite a recovery, eh?

By Paul Murphy and Cardiff Garcia