JPMorgan Chase exceeded forecasts for its second-quarter earnings on Friday, thanks to robust capital market activity and a rebound in dealmaking for its investment banking division.
As more businesses gain confidence in the potential of the US economy to avoid a significant collapse, they are turning to the capital markets for funding and completing takeover agreements, which helps increase Wall Street banks' revenue from fees.
Compared to a low base, investment banking fees increased by 50%; nonetheless, this was more than the company's original estimate of 25% to 30%.
CEO Jamie Dimon stated that "even though market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks." He added that among the dangers were a shifting geopolitical environment, which is still the most perilous since World War II.
Threats including significant government deficits and trade restructuring might keep inflation and interest rates higher than what the market anticipates, according to Dimon.
The biggest American bank made provisions for credit losses totaling $3.1 billion, which is 62% more than it did in the first quarter.
Net interest income (NII), or the difference between what is earned on loans and what is paid out on deposits, increased 4% to $22.9 billion as a result of high rates, which continued to support lending.
Despite competition for deposits and pressure to pay depositors more for safekeeping their money, lending has remained robust.
Compared to $14.47 billion, or $4.75 per share, a year earlier, the largest U.S. bank's earnings increased by 25% to $18.15 billion, or $6.12 per share, for the three months ended June 30.
An approximate $8 billion accounting gain resulted from a share exchange agreement with Visa. When the Visa transaction was taken out, net income was $13.1 billion.
When all one-time expenses are subtracted, the bank made $4.26 per share as opposed to LSEG's projected $4.19 per share.
"We are encouraged by some of the economic trends that underpinned client activity in the second quarter and we remain cautiously optimistic as we head into the second half of the year," Jennifer Piepszak and Troy Rohrbaugh, co-CEOs of its commercial and investment bank, said in a post-earnings memo as reported in the media.
A bright point for the quarter was trading, which brought in 10% more money than the previous year. Fixed-income trading revenue increased by 5%, while equity revenue increased by 21%.
According to the bank, the commercial and investment banking division's first-half revenue of $35.5 billion set a record.
JPMorgan combined its corporate, investment, and commercial banking divisions under the umbrella of global banking earlier this year.
Opimas CEO Octavio Marenzi stated in a letter, "JPMorgan's results showed us two things: First, investment banking and equities trading did really well compared to last year."
"Secondly, we see Main Street banking beginning to sputter," he continued, although the bank has done a great job navigating a difficult climate for interest rates.
Trading in the bank's shares fell 0.6% before to the bell. Despite outperforming competitors Wells Fargo, Citigroup, Bank of America (BAC.N), opens new tab, and Wells Fargo, they have gained 22% thus far this year.
Investor attention is also focused on JPMorgan's succession plans. The board of the bank has selected a number of candidates to replace Dimon, who is anticipated to retire in less than five years.
Troy Rohrbaugh and Jennifer Piepszak, who co-manage the commercial and investment bank, are among the candidates. The other two are Mary Erdoes, the head of asset and wealth management, and Marianne Lake, who oversees consumer and community banking.
Because of increased deposit fees and fierce rivalry for clients' money, JPMorgan's competitor Wells Fargo failed to meet analysts' expectations for interest income on Friday.
(Sourec:www.theglobeandmail.com)
As more businesses gain confidence in the potential of the US economy to avoid a significant collapse, they are turning to the capital markets for funding and completing takeover agreements, which helps increase Wall Street banks' revenue from fees.
Compared to a low base, investment banking fees increased by 50%; nonetheless, this was more than the company's original estimate of 25% to 30%.
CEO Jamie Dimon stated that "even though market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks." He added that among the dangers were a shifting geopolitical environment, which is still the most perilous since World War II.
Threats including significant government deficits and trade restructuring might keep inflation and interest rates higher than what the market anticipates, according to Dimon.
The biggest American bank made provisions for credit losses totaling $3.1 billion, which is 62% more than it did in the first quarter.
Net interest income (NII), or the difference between what is earned on loans and what is paid out on deposits, increased 4% to $22.9 billion as a result of high rates, which continued to support lending.
Despite competition for deposits and pressure to pay depositors more for safekeeping their money, lending has remained robust.
Compared to $14.47 billion, or $4.75 per share, a year earlier, the largest U.S. bank's earnings increased by 25% to $18.15 billion, or $6.12 per share, for the three months ended June 30.
An approximate $8 billion accounting gain resulted from a share exchange agreement with Visa. When the Visa transaction was taken out, net income was $13.1 billion.
When all one-time expenses are subtracted, the bank made $4.26 per share as opposed to LSEG's projected $4.19 per share.
"We are encouraged by some of the economic trends that underpinned client activity in the second quarter and we remain cautiously optimistic as we head into the second half of the year," Jennifer Piepszak and Troy Rohrbaugh, co-CEOs of its commercial and investment bank, said in a post-earnings memo as reported in the media.
A bright point for the quarter was trading, which brought in 10% more money than the previous year. Fixed-income trading revenue increased by 5%, while equity revenue increased by 21%.
According to the bank, the commercial and investment banking division's first-half revenue of $35.5 billion set a record.
JPMorgan combined its corporate, investment, and commercial banking divisions under the umbrella of global banking earlier this year.
Opimas CEO Octavio Marenzi stated in a letter, "JPMorgan's results showed us two things: First, investment banking and equities trading did really well compared to last year."
"Secondly, we see Main Street banking beginning to sputter," he continued, although the bank has done a great job navigating a difficult climate for interest rates.
Trading in the bank's shares fell 0.6% before to the bell. Despite outperforming competitors Wells Fargo, Citigroup, Bank of America (BAC.N), opens new tab, and Wells Fargo, they have gained 22% thus far this year.
Investor attention is also focused on JPMorgan's succession plans. The board of the bank has selected a number of candidates to replace Dimon, who is anticipated to retire in less than five years.
Troy Rohrbaugh and Jennifer Piepszak, who co-manage the commercial and investment bank, are among the candidates. The other two are Mary Erdoes, the head of asset and wealth management, and Marianne Lake, who oversees consumer and community banking.
Because of increased deposit fees and fierce rivalry for clients' money, JPMorgan's competitor Wells Fargo failed to meet analysts' expectations for interest income on Friday.
(Sourec:www.theglobeandmail.com)