UPDATE 1-JPMorgan sets aside $10.5 bln for loan losses as profit top estimates

(Adds details from statement, Dimon's quote)

July 14 (Reuters) - JPMorgan Chase & Co on Tuesday set aside about $10.5 billion in reserves to cover a wave of potential defaults in the aftermath of the COVID-19 pandemic as the largest U.S. bank reported a smaller-than-expected 51% drop in second-quarter profit.

The bank's net income fell to $4.69 billion, or $1.38 per share, in the quarter ended June 30, but topped analysts' lowered estimates of $1.04 per share, sending its shares up 4% in premarket trading.

The scale of expected loan losses at the bank is a major barometer of the health of the U.S. economy, as the coronavirus pandemic drives up unemployment and puts pressure on businesses.

"Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy," Chief Executive Officer Jamie Dimon said.

Dimon also said the bank will continue to pay dividend unless "the economic situation deteriorates materially and significantly".

Wells Fargo & Co and Citigroup Inc are scheduled to report results later on Tuesday, followed by Goldman Sachs Group Inc on Wednesday and Morgan Stanley and Bank of America Corp on Thursday. (Reporting by Anirban Sen in Bangalore and Elizabeth Dilts-Marshall in New York Editing by Lauren Tara LaCapra and Saumyadeb Chakrabarty)