JPMorgan Chase
JPM 1.43%
& Co. announced Tuesday that second-quarter earnings were up year-over-year as the bank topped up funds to prepare for a painful recession.
The country’s largest bank posted earnings of $ 11.95 billion, or $ 3.78 per share, compared to $ 4.69 billion or $ 1.38 per share before one Year. That exceeded analysts’ expectations, who had predicted $ 3.20 per share.
Still, revenue fell 8% to $ 30.48 billion from $ 33.08 billion last year, which is due to lower credit margins and lower trading revenues. Analysts had expected sales of $ 29.97 billion, according to FactSet.
The divergence between earnings and sales is largely due to the extraordinary conditions of the second quarter of 2020, when the coronavirus pandemic appeared to be decimating the economy. Then JPMorgan set aside $ 10.47 billion to prepare for a wave of loan defaults. During the quarter, the bank continued to unlock pandemic loan loss reserves, unlocking another $ 3 billion, and increasing its bottom line.
The second quarter will likely prove to be an intermediate period for big banks like JPMorgan. Companies that boomed during the pandemic, especially trading and investment banking, are slowing from record pace. Corporate clients who were nervous about raising money last year are now overflowing with cash. Last year’s market chaos, which can be ideal for trading, has calmed down after the US got the pandemic under control.
Revenue for JPMorgan’s corporate and investment bank declined 19% and revenue for consumer bank increased 3%.
Loan balances rose 3%, but with interest rates close to zero, the bank’s loan profits declined again.
Net interest income, the amount the bank takes in lending interest minus deposit payments, decreased by 8%.
Net write-offs or loans that the bank no longer expects to be repaid have decreased compared to the previous year.
JPMorgan stock is up 24% this year, reaching an all-time high in June. The share lost 1% on Tuesday morning. Investors have broadly turned to banking to benefit from the economic recovery.
The corporate and investment bank traded $ 6.79 billion, 30% less than the previous blockbuster quarter a year, but better than the executives had forecast. Investment banking fees increased 25%. Equity revenues increased 9% and bond revenues increased 26%. Merger and acquisition advisory fees increased 52%.
JPMorgan consumer credit card spending rose 51% in the quarter, but borrowers are still paying back their card debt quickly. The bank said spending on both credit cards and debit cards has surpassed pre-pandemic levels, including in categories such as travel and entertainment.
Investors and analysts are eagerly reading signs of a revival in credit growth that they believe signal the next phase of economic recovery.
The commercial bank posted a profit of $ 1.42 billion after posting a loss on loan loss reserves a year ago. The asset and wealth management unit’s profit rose 74% to $ 1.15 billion.
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