JPMorgan profit beats estimates on bond trading, loan growth

JPMorgan says second-quarter profit fell 1.4%, beating analysts’ estimates as fixed-income trading revenue and loan growth jumped


JPMorgan’s revenue figure included $3.96 billion from fixed-income trading, a 35% increase, beating the $3.57 billion estimate of analysts. Photo: Bloomberg
JPMorgan’s revenue figure included $3.96 billion from fixed-income trading, a 35% increase, beating the $3.57 billion estimate of analysts. Photo: Bloomberg

New York: JPMorgan Chase & Co., the biggest US bank by assets, said second-quarter profit fell 1.4%, beating analysts’ estimates as fixed-income trading revenue and loan growth jumped.

Net income dropped to $6.2 billion, or $1.55 a share, from $6.29 billion, or $1.54, a year earlier, the New York-based company said on Thursday in a statement. Excluding an accounting adjustment and a legal benefit, earnings were $1.46 a share, 3 cents higher than analysts’ average estimate in a Bloomberg survey.

Revenue climbed 2.8% to $25.2 billion, beating the $24.5 billion average estimate of seven analysts surveyed by Bloomberg. The company said average core loans increased 16% from a year earlier. The revenue figure included $3.96 billion from fixed-income trading, a 35% increase, beating the $3.57 billion estimate of analysts surveyed by Bloomberg. Equity trading rose 1.5% to $1.6 billion.

JPMorgan kicks off earnings season for US banks, and may offer insight into the industry’s prospects for trading and advisory operations after the UK’s surprise vote last month to leave the European Union. While JPMorgan executives have said trading rebounded in April and May, that was before the referendum roiled markets and pushed out expectations for additional US interest-rate increases to at least next year. The delay would extend a post-financial-crisis era of low rates that’s forced banks to rely on expense cuts to cope with stagnant revenue.

Treasury Yields

Bank stocks plummeted after the vote and yields on 10 year Treasury notes fell to a record, draining financial firms of interest income. JPMorgan, which lost about 10% in the two days after the 23 June referendum, has since recovered most of that decline.

“We saw strong underlying performance with record consumer deposits, credit-card sales volume, merchant processing volume and broad core loan growth” fueled by mortgages and commercial real estate, Chief Executive Officer Jamie Dimon said in the statement.

Non-interest expenses fell 6% to $13.6 billion on cost cutting and lower legal bills, the bank said. That compared with analysts’ $14 billion estimate.

Earnings at the corporate and investment bank, run by Daniel Pinto, climbed 6.5% to $2.49 billion as revenue rose 5.1% from a year earlier. Markets revenue, which includes bond and stock trading, rose 23%. In June, Pinto said that trading revenue in the quarter was headed for a mid-teens percentage increase from a year earlier on strength in fixed income, especially rates trading.

Investment banking revenue fell 15% to $1.5 billion on lower equity-underwriting fees. The figure was in line with analysts’ $1.49 billion estimate. Bloomberg

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