NEW YORK (CNNMoney) — JPMorgan's profits surged in the second quarter, though the results were not as rosy as they first seem.
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.
JPMorgan's 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.
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 is the first bank to report earnings for the second quarter. Wells Fargo will release its quarterly results later Friday morning. Due up next week: Bank of America, Goldman Sachs, Morgan Stanley and Citigroup.
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