New York, NY, United States (4E) – JP Morgan Chase’s second quarter revenue fell by 17 per cent that saw its quarterly earnings decline by 8.7 per cent at $4.96bn, which was slightly lower than the previous quarter. The eagerly anticipated quarterly profit announcement comes at the back of news of a $4.4bn trading loss by the bank’s London offices.
The better than expected second quarter profits came two months after revelations of $2bn loss from botched trades that shocked many investors.
In addition to the a $4.4bn second-quarter loss, JP Morgan also revised its first-quarter earnings lowering profit by $459mn, which brings the total losses from the “London whale” trade transactions to around $5.8bn. The bank previously reported a $800 million loss in the first quarter.
In a statement from the bank regarding the bank’s revision of its first quarter profit and revenue figures, it said that the JP Morgan recently found out information that puts into question the integrity of the trader marks and also discovered that certain individuals were looking to avoid reporting the actual amount of losses in the previous quarter.
The massive loss was inflicted by Bruno Iksilon, a trader from the bank’s London Chief Investment Office, who lost billions in just one night. The loss got Ina Drew, who formerly heads the group from its New York headquarters, fired and according to DEO Jamie Dimon left the bank with “egg on its face”.
While Dimon admitted that there is no guarantee that the portfolio will lose more money, he predicts further losses on credit derivatives trades could reach $700mn to $1.7bn.
On Friday, the bank forced its traders and executives to be held responsible for the losses that occurred in their watch by giving back huge amounts of their compensation from stock grants and bonuses. This punishment known as “clawback” was introduced by the Sarbanes-Oxley Act in 2002 following the Enron accounting scandal.
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