J.P. Morgan Chase & Co. today reported a loss of US$548 million for the second quarter after boosting its reserves by US$2.3 billion to cover the expected cost of litigation stemming from the Enron Corp. and WorldCom Inc. bankruptcies.

The New York-based bank, the second largest in the U.S., said that the results for the April-June period, which translate to a loss of US27¢ a share, compared with earnings of US$1.83 billion , or US89¢ a share, a year earlier.

Excluding the litigation reserve and a US$60 million charge related to its merger with Bank One, J.P. Morgan Chase’s earnings for the second quarter would have been US$1.81 billion, or US85¢ per share.

William Harrison Jr., chairman and chief executive, said in a statement accompanying the report that J.P. Morgan Chase “will continue to defend itself vigorously” in the legal cases. But, he added: “We have decided, after an extensive review, that our litigation reserves should be increased.”

Last week, Citigroup Inc., the largest financial institution in the U.S., reported a sharp drop in profits as a mammoth class-action settlement with WorldCom investors cut into its earnings.

Responding to the increased litigation reserves, Standard & Poor’s Ratings Services said that this move is in line with Standard & Poor’s expectations and will not affect J.P. Morgan’s ratings.

“The charges represent less than a quarter’s earnings for the combined J.P. Morgan and Bank One Corp. companies and should not impair the firm’s future performance potential,” the rating agency said.

It noted that J.P. Morgan is implicated in many of the same civil suits as Citigroup Inc., so it is appropriate that it has also found the need to estimate the potential charges. Citigroup earlier added $7.9 billion to its reserves.

“The fact that J. P. Morgan’s reserves are lower than Citigroup’s in part reflects the fact that it has less exposure to the equity research conflict of interest suits and has chosen not to settle on the WorldCom Inc. underwriting-related charges,” S&P said.

“The ultimate legal charges are still very difficult to estimate for any of the firms involved in the suits. Whether J.P. Morgan’s current reserves prove adequate depends in part on whether its position prevails in the WorldCom suit.”