NEW YORK ( TheStreet) -- JPMorgan Chase ( JPM) CEO Jamie Dimon answered plenty of questions on the bank's trading loss in his testimony before the Senate Banking Committee on Wednesday, but shareholders were still left hanging on the one question that really matters to them. What is the ultimate size of the trading loss?
Estimates by some analysts now top $5 billion, according to press reports, but the CEO refused to comment on details about the size of the trades and how they were being unwound in Senate testimony, saying it would compromise the bank's interests. While Dimon will testify before the House again on June 19, shareholders may have to wait until the bank reports its results on July 13 to get answers to their multi-billion dollar question. Still, shares of the bank were up more than 2% on Wednesday following his testimony despite broad market weakness, a sign that shareholders have still not lost their faith in the bank or in Dimon's ability to steer it out of its mess. "While there are still two weeks left in our second quarter, we expect our quarter to be solidly profitable," Dimon said in his prepared testimony, as he reiterated that the size of the loss did not affect the bank's capital position and hurt neither clients nor taxpayers. The CEO said in an interview to CNBC following his testimony that the bank will disclose what the trading losses were "for the quarter" when it reports next month. JPMorgan will also offer more details on "what risk remains." "We said in testimony we are going to be solidly profitable this quarter. We will be solidly profitable in the third and fourth quarter too, unless something else goes wrong, but it won't be because of this
CIO trading loss that we are not solidly profitable," he told CNBC. JPMorgan is usually the first to kick off bank earnings season and often sets the bar for other banks' performance. This time would be no different as investors focus on how the bank navigated the capital markets as macro-economic conditions once again turned adverse in the wake of Europe's ongoing turmoil.
Concerns about the bank's ability to handle a potential break-up of the euro and a period of prolonged low interest rates as yields continue to hit record lows will likely have a bigger bearing on the bank's long-term profitability than the trading loss, if Dimon's testimony is to be believed. Still, analysts will expectedly zoom in on any new bits of information on the dealings of the Chief Investment Office and examine its implications for the Volcker rule, which seeks to rein in risky trading by banks, and the regulatory environment. Shares of JPMorgan still trade more than 25% below their March peak of $46 and amid continuing uncertainty in Europe, it is hard to imagine the stock reclaiming the peak anytime soon, even if the bank does manage to pull off a blowout quarter. Most analysts remain positive on the long-term outlook for the stock, though they expect the stock to stay under pressure in light of a weakening global economic outlook and negative headline risk. Shareholders, who have borne the brunt of the loss in both earnings and market-cap, might also have to wait for more than a quarter before they see justice in the form of compensation clawbacks and management turnover. In his testimony, Dimon said the bank's management had been "complacent" and over-confident about the performance of the CIO unit. While the risk management committee should have been more "independent-minded" and challenged the unit more, the CEO said the fault ultimately lied with management. JPMorgan has a clawback policy in place that allows the bank to recover unvested share units and cash bonuses from senior members of the operating committee if they display "bad judgement". The CEO said the bank is conducting a review and that clawbacks were "likely." -- Written by Shanthi Bharatwaj in New York.