JPMorgan on Friday release Second-quarter profits and revenue exceeded analysts’ expectations, and investment banking fees soared 52% from the same period a year earlier.
Here’s what the company reports:
- income: Adjusted to $4.26 per share, compared with $4.19 expected by analysts polled by LSEG
- income: $50.99 billion vs. $49.87 billion expected
The bank said profits rose 25% from a year earlier to $18.15 billion, or $6.12 per share. Excluding items related to the bank’s stake in Visa, profit was $4.26 per share.
Revenue rose 20% to $50.99 billion, beating consensus estimates from analysts polled by LSEG, thanks to better-than-expected investment banking fees and stock trading performance.
Chief Executive Jamie Dimon said in a news release that his company remains wary of potential future risks, including higher-than-expected inflation and interest rates, even though stock and bond valuations currently “reflect a reasonably favorable economic outlook.”
“The geopolitical situation remains complex and may be the most dangerous since World War II, although its outcome and impact on the global economy remain unknown,” Dimon said. “There has been some progress in lowering inflation, but we still have many problems ahead of us. “Inflationary forces: huge fiscal deficits, infrastructure needs, trade restructuring and the remilitarization of the world.”
A rebound in activity on Wall Street, particularly in inquiries, is expected to help banks this quarter, and JPMorgan’s results confirmed that.
JPMorgan Chase received $2.3 billion in investment banking fees, about $300 million more than StreetAccount expected.
Thanks to strong derivatives performance, equity trading revenue jumped 21% to $3 billion, $230 million higher than expected. Fixed-income trading rose 5% to $4.8 billion, in line with expectations.
But the bank’s provision for credit losses for the quarter was $3.05 billion, beating estimates of $2.78 billion, a sign it expects more borrowers to default in the future. The bank said an increase in charge-offs and building loan-loss provisions in the quarter was driven by the company’s large credit card business.
Octavio Marenzi, chief executive of consultancy Opimas, said: “JPMorgan has responded well to the challenging interest rate environment.”
Still, while banking and stock trading boosted results, “we’re seeing high street banking start to struggle,” Marenzi said. “Credit loss provisions have risen sharply, indicating that JPMorgan expects difficulties in the U.S. economy.”
JPMorgan shares fell about 1% on Friday.
JPMorgan Chase & Co. Chief Financial Officer Jeremy Barnum told reporters on a conference call on Friday that while there was some weakness among lower-income groups, overall he saw “pretty healthy consumers.” He noted that about half of the increase in credit card reserves is related to rising balances.
“The overall picture of charge-offs right now is consistent with normalization rather than deterioration,” Barnum said. “Yes, the economy is slowing, but there appears to be a trend toward a soft landing.”
FuGuo bank and Citigroup Earnings were also reported on Friday, while Goldman Sachs, Bank of America and Morgan Stanley Report next week.
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