Friday, May 11, 2012

JPM Historical Net Charge Offs

People seem to be appalled that JPM could have assumed a "massive" $2B loss in its $320B trading portfolio in one quarter.  In the context of the amount that the bank has charged off in its $720B loan portfolio over the last dozen quarters, $2B is nothing though.  In 1Q10 alone, for example, the bank charged off $8B, or 4.5% of the whole portfolio (annualized).  No one seems to talk about how risky a bank's loan portfolio is though...

The biggest difference between a bank's loan portfolio and its securities portfolio is that the securities portfolio is marked to market.  Being a bank is risky business, period.

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