Despite having to set aside nearly $10.5 billion to cover future potential loan losses, JPMorgan Chase (JPM 0.65%) generated almost $4.7 billion in profits in the second quarter ($1.38 in earnings per share), beating most estimates. That's down about 51% from the second quarter of 2019, but up 77% from the first quarter of the year.

America's largest bank generated roughly $33.8 billion in total revenue, its highest quarterly revenue amount ever.

This explains how the bank managed to generate profits despite a quarterly loan-loss provision that is larger than any quarterly provision the bank took during the Great Recession.

This quarter's provision is also higher than the roughly $8.3 billion JPMorgan set aside to cover future potential loan losses last quarter.

JPMorgan Chase

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Revenue and profits were heavily buoyed by the corporate and investment bank, which generated nearly $5.5 billion in profits on net revenue of almost $16.4 billion.

"Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy," CEO Jamie Dimon said in a statement. "However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm."

Net charge-offs -- debt unlikely to be collected by the bank, a good indicator of ultimate write-offs -- remained low for the quarter at $1.6 billion, up slightly from the $1.4 billion in net charge-offs in the second quarter of 2019.

Despite net charge-offs remaining low, there is still trouble on the horizon.

Total non-performing assets, which is largely composed of loans that haven't received a payment in at least 90 days, reached $8.4 billion at the end of the second quarter, up 60% from the second quarter of last year and 35% higher than the first quarter of this year.

There are also still many borrowers on deferral plans, including 7.4% of borrowers in the auto loan portfolio and 6.9% of borrowers in the home loan portfolio.

The bank's common equity tier 1 ratio (a measure of a bank's core capital to total risk-weighted assets, and a metric closely watched by regulators) rose to 12.4% at the end of the quarter, up from 11.5% at the end of last quarter.

That will provide JPMorgan with some breathing room from its new required CET1 ratio of 11.3% in October.