JP Morgan posts 84% profit plunge

It's kind of amazing that any bank is earning a profit these days. But JPMorgan Chase (NYSE: JPM) pulled it off -- making a profit of $527 million -- 84% less than last year at this time. Bad loans are the culprit -- leading to $5.8 billion in write-downs, losses and credit provisions. And JPMorgan's outlook for the next few quarters is not upbeat.

What I find most interesting about its numbers is that one of its lines of business saw a boost in revenue and profit. In particular, its investment-banking division made $882 million in the third quarter -- 198% more than last year -- and its revenue rose $1.1 billion. Unfortunately, its retail and credit card units suffered. Retail bank earnings fell 61% to $247 million and its credit-card division's $292 million in profit was 63% below last year's.

Although its CEO is downplaying expectations, I think that JPMorgan will benefit from the new two-tiered banking system created by the $250 billion capital infusion plan. Banks that don't get enough government capital will lose deposit and loan business to the strongest players. JPMorgan -- which got $25 billion in taxpayer money -- will be one of the beneficiaries.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in JPMorgan securities.