JPMorgan: Solid gains, some 'fluff'

NEW YORK (CNNMoney)

Total loans the bank made were down slightly. And some of the profit gains came from accounting entries rather than strong growth in the underlying business.

"The headline number is good, but they did get some benefit from fluff," said Dan Marchon, an analyst at Raymond James.

For example, JPMorgan decreased the amount it holds to buffer the bank against future losses from mortgages and credit card delinquencies, a move that lifts reported profits. That's reasonable in a strengthening economy. But analysts had hoped to see at least some uptick in the bank's lending activity.

CEO Jamie Dimon noted in a statement that consumers, small businesses and corporations remain "cautious" and that loan growth was flat across the banking industry.

Even so, Dimon was optimistic about business conditions: "We continue to see broad-based signs that the U.S. economy is improving," said Dimon.

Related: Are we at risk of another banking crisis?

JPMorgan's (JPM, Fortune 500) shares moved around the breakeven line in premarket trading.

The results showed that JPMorgan has managed to put its London Whale trading problems behind it.

The bank reported profit growth of 31% to $1.60 per share - Wall Street analysts had expected $1.44. Revenue was up 14% to $26 billion, versus an estimate of $24.8 billion.

Related: Jamie Dimon's $5 billion bet against bonds

Gains in investment banking helped offset a dip in revenues from its consumer banking and commercial banking units.

The bank's investment banking division generated profits from trading and from corporate debt issuance and IPOs. "Their investment banking results show that JPMorgan continues to be best in class," said Marchon.

The bank's shares are up 25% this year.

JPMorgan (JPM, Fortune 500) is the first bank to report earnings for the second quarter. Wells Fargo (WFC, Fortune 500) will release its quarterly results later Friday morning. Due up next week: Bank of Americ (BAC, Fortune 500)a, Goldman Sach (GS, Fortune 500)s, Morgan Stanle (MS, Fortune 500)y and Citigroup (C, Fortune 500).

First Published: July 12, 2013: 7:30 AM ET

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