JPMorgan Chase, the country's biggest bank, reported a record quarterly profit Friday, helped by a surge in mortgage refinancing. Chief executive Jamie Dimon said he believed the housing market "has turned a corner."
The bank made $5.3 billion from July through September, up 36 percent from the same period a year ago. It worked out to $1.40 per share, blowing away the $1.21 predicted by analysts polled by FactSet, a provider of financial data.
Revenue rose 6 percent to $25.9 billion, beating expectations of $24.4 billion. Earnings were also helped because the bank set aside less money for bad loans -- $1.8 billion, down 26 percent from a year ago.
Revenue from mortgage loans shot up 29 percent. About three-quarters of that was from people refinancing, rather than buying new homes. Low interest rates and government help encouraged homeowners to refinance.
A Federal Reserve survey earlier this week found that a stronger housing market helped economic growth in almost every part of the country. Home sales are up, prices are rising more consistently in most places, and builders are more confident.
On a call with reporters, Dimon noted that the bank was still seeing a high level of souring mortgage loans, and said he expects high default-related expenses "for a while longer." And he noted homeowners are still struggling under mortgages they can't afford, saying the bank was working to modify those loans.
The bank gave few details on the surprise $6 billion trading loss that dominated its previous earnings report. It did mention that a credit portfolio moved to the investment bank from the chief investment office, which was responsible for the bad trade, "experienced a modest loss."
The bank set aside an extra $684 million for legal expenses. Chief financial officer Doug Braunstein said the reserves were related to "a variety of issues," and not just a lawsuit filed last week by the New York attorney general over mortgage-backed securities sold by Bear Stearns. JPMorgan bought Bear Stearns as it veered toward collapse in 2008.
During the quarter, the bank shed about 3,300 jobs to 259,550.
Dimon said the number of workers would continue to come down, partly because the bank will need fewer people to handle problem mortgages but also because it will continue to look for efficiencies.
He declined to give specifics on how bonus season might play out early next year. "The company's doing quite well, and we want to pay our people fairly and properly as we always have," he said.