It's hard to call a massive earnings upside surprise bad news. But JPMorgan's (NYSE: JPM) second quarter earnings provide some temptation to at least call it not-so-great news. The far-greater-than-expected earnings per share were driven by a big release of $325 million in loan loss reserves. JPMorgan overall added $787 million to the investment bank by lowering the unit's loan-loss reserves to $2.1 billion.

Investors and analysts were quick to note that the investment banking division struggled, as expected. Net revenue fell 24 percent to $6.3 billion sequentially, while its profits dropped 44 percent to $1.38 billion. The trading division was down 6 percent; other businesses remained relatively stable. The bank also took a $550 million charge to pay for the one-time tax on British bankers' bonuses.

We all knew that trading revenues--the big driver earlier this year--would be harder to come by. This certainly sets the tone for Morgan Stanley (NYSE: MS) and even Goldman Sachs (NYSE: GS). But there are so many wild cards. Apparently no one was counting on the loan-loss release. All in all, these banks are getting more difficult to forecast. These big upside surprises may well reflect the IR folks subtly talking down the analysts.

For more:
- here's a Reuters article
- here's a glance from Reuters

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