No surprises here: It was another blowout quarter for JPMorgan Chase (NYSE:JPM), one of only a few surviving banks that's just minting money in the post-Lehman world.

Net income for the third quarter came in at $3.6 billion, or $0.82 per share, on revenue of $28.8 billion. That was up from a profit of $527 million, or $0.09 per share, in the same quarter last year.

As has been the case for a while now, the results were polarized between two divisions, investment banking and traditional lending. Broken down by segment, it's plainly clear where the money is coming from:


Q3 Net Income

Investment Bank

$1.9 billion

Retail Financial Services

$7 million

Card Services

($700 million)

Commercial Banking

$341 million

Treasury and Securities Services

$302 million

Asset Management

$430 million

Corporate/Private Equity

$1.3 billion

Investment banking and corporate services (essentially trading) are pulling up the slack of still-struggling traditional lending units. To see the really interesting stuff, peek inside the investment banking unit:

Investment Banking Segment

Q3 Revenue


$384 million

Equity Underwriting

$681 million

Debt Underwriting

$593 million

Fixed-Income Markets

$5 billion

Equity Markets

$941 million

Credit Portfolio

($102 million)

That's incredible. Far more than half of net income came from investment banking, and more than two-thirds of investment banking revenue came solely from fixed-income trading. JPMorgan is one of the largest banks in the world, but it's being carried by a few Red Bull-guzzling bond traders.

This has become the norm not just for JPMorgan, but also for Goldman Sachs (NYSE:GS). Last quarter, substantially all of Goldman's gains came from its fixed- income, currency, and commodities division, which, like JPMorgan, gushes cash from high spreads and low competition.

But as we step back from investment banking and look at more traditional lending segments, things aren't nearly as chipper. JPMorgan Chase added $2 billion in loan-loss reserves in the quarter, as delinquencies continued to rise. In the retail services division, delinquencies of more than 30 days rose 63 basis points to 5.85%. Charge-off rates on prime mortgages rose to 3.45%, a notable jump from 3.07% last quarter. Credit cards were particularly unsightly, with a 10.3% charge-off rate and increasing early-stage delinquencies creating a $700 million loss.

JPMorgan can stomach these charges because (a) investment banking profit more than compensates, and (b) while losses are increasing, they're not nearly as bad as other banks.

But continuing trouble from credit losses doesn't bode well for banks with less robust investment banking divisions, and banks where the primary focus leans heavily toward traditional lending. I'm looking at you, Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC).

What do you think? Have any predictions about other bank earnings, due out later this week? Let's hear 'em in the comments section below.