JPMorgan Profit Expectations Fall

JPMorgan

is expected to report record earnings tomorrow, although its profits are expected to fall from 2010 figures. Projected earnings for the investment bank are $18.5 billion, an increase of 6% on figures for 2010. However, some analysts expect adjusted profits to reach only $3.74 billion, or 90 cents a share, a drop of 23% from the same period in 2010. Previously, analysts had expected earnings of 94 cents per share. The bank has been hit by troubles in its investment banking business. Revenues from the bank's investment operations fell to $4.5 billion in the third quarter--a near 50% drop from its Q1 revenue of $8.2 billion--thanks to U.S. lawmakers' game of chicken with the nation's budget, the S&P's downgrade of American debt, and mounting pressures in the Euro zone as Greece came closer to default. JPMorgan's figures were disappointing even after an adjustment in debt valuation for banks boosted profits in Q3 2011 at JPMorgan and other investment banks such as Goldman Sachs

and Citigroup

. However, the accounting trick's benefits to banks were short lived, since the price of their debt rose in the last quarter of 2011, causing earnings to fall. Analysts still see trading and investment banking as a weak industry. Ed Najarian, Head of Bank Research at International Strategy and Investment Group in New York,

that revenues in the industry remain "weak and volatile" with investment banking showing little improvement at the end of 2011, despite favorable results in other economic sectors.