(Image credit: Scott Eells/Bloomberg via Getty Images)

By Zunaira Zaki and Susanna Kim

JPMorgan Chase, still reeling from trading losses in its investment unit that have expanded to $4.4 billion, reported second-quarter profit of $5 billion Friday.

Investors were less interested in the largest US bank's net income than the total losses from bad hedged bets in their chief investment office. They announced that the loss this quarter from that the trade was $4.4 billion, estimates had the loss in the range anywhere from $2 billion to $9 billion. The bank has yet to make clear if there is the possibility of incurring more loss.

In a surprise announcement in a SEC filing ahead of the earnings report, JP Morgan revised its first-quarter earnings to show an additional loss because traders in the CIO unit were misrepresenting the extent of the losses.

According to the SEC filing: "… the firm has recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter."

"The loss was slightly more than I expected, but I wouldn't call it shocking," said Jim Sinegal, director of financial services research at Morningstar, an investment firm. "Although they've reduced positions on a notional and value at risk basis, there is some exposure and risk left. However, it looks like future losses are likely to be much smaller than they experienced this quarter."

CEO Jamie Dimon was previously criticized for describing the trading loss as a "tempest in a teapot," before he later acknowledged that the losses were greater than he was told by his management. His chief investment officer, Ina Drew, resigned in May.

"What Jamie Dimon has done well is under promise and over deliver," Sinegal said. "Not only has this escaped his eye as a risk manager - but to the extent that it got out of hand more than once, if it turns out even bigger than that, you have to wonder if he has as much control as everyone believes him to have."

Sinegal said he would have been surprised by a loss of $5 billion or more.

"I think you would have to reassess your opinion of Dimon and all top risk managers," Sinegal said. "It is generally well accepted that JPMorgan has done the best job managing risk of the large banks."

Sinegal expects bank earnings as a whole to be lukewarm.

"Obviously Europe has weighed on a lot of businesses, anything capital markets related," he said. The IPO market and M&A activity have slowed so investment banking is expected to show not only a weak quarter but a weak year.

With a diversified business, Wells Fargo reported on Friday morning that its profit in its second quarter rose 17 percent, beating earnings estimates. The bank's earnings were boosted by growth in its lending and deposits and "record quarterly mortgage applications," according to its earnings release.

The country's fourth-largest banks by assets reported profit of $4.6 billion, up from $3.95 billion last year in the same quarter.

In terms of other banks' profitability, Sinegal is more skeptical.

"For a number of quarters, people have been waiting for signs of revenue growth," Sinegal said. "I wouldn't be surprised if it's another disappointing quarter as far as that goes. The economy hasn't heated up so I don't think banking is going to be that hot."