UPDATE: JPMorgan (JPM) Falls After Surprise Call, Mark-to-Market Losses

May 10, 2012 5:01 PM EDT
(Updated - May 10, 2012 5:19 PM EDT)

Shares of JPMorgan (NYSE: JPM) are under heavy pressure after-hours Thursday after announcing a surprise conference call and large surprise mark-to-market loss in its chief investment office and exposure to a possible credit downgrade.

Since March 31, 2012, the company said its CIO has had significant mark-to-market losses in its synthetic credit portfolio. JPMorgan said the portfolio has proven to be "riskier, more volatile and less effective as an economic hedge than the Firm previously believed."

The comapny said it now see a loss of $800 million in its CIO unit, versus an expected profit of up to $200 million. Although CEO Jamie Dimon said it could "easily get worse."

The company said the loss was driven by $2 billion trading loss in its synthetic credit portfolio.

Despite the loss, JPMorgan said at this time it still expects to earn $4 billion in the quarter.

Commenting on a possible credit downgrade in its 10-Q, JPMorgan said the bank would need $971 million in added collateral amid a one-notch ratings agency downgrade. The bank would need $1.7 billion in added collateral if its rating was cut two notches.

Shares of JPMorgan are down 4% after-hours ahead of the call.

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