JPMorgan Chase (JPM) Q2 2024 earnings

JPMorgan Chase on Friday Posted Second-quarter profit and revenue exceeded analyst expectations as investment banking costs rose 52% from a year earlier.

This is what the company reported:

• Income: $4.26 per share adjusted versus $4.19 estimate from analysts surveyed by LSEG
• Gain: $50.99 billion vs. $49.87 billion estimate

The bank said profit rose 25% from the same period a year earlier to $18.15 billion, or $6.12 per share. Excluding items related to the bank’s stake in Visa, earnings were $4.26 per share.

Revenue rose 20% to $50.99 billion, above the consensus estimate of analysts surveyed by LSEG, helped by better-than-expected investment banking expenses and stock trading results.

CEO Jamie Dimon noted in the press release that his company was wary of potential future risks, including higher-than-expected inflation and interest rates, even though stock and bond valuations currently reflect “a rather favorable economic outlook.”

“The geopolitical situation remains complex and potentially the most dangerous since World War II – although the outcome and impact on the global economy remain unknown,” Dimon said. “Some progress has been made in reducing inflation, but several inflationary forces are still ahead of us: large budget deficits, infrastructure needs, trade restructuring and remilitarization of the world.”

A recovery in activity on Wall Street, especially on the advisory side, was expected to help banks this quarter, and JPMorgan’s results bear that out.

JPMorgan has raked in $2.3 billion in investment banking fees, beating StreetAccount’s estimate by about $300 million.

Equities trading revenue rose 21% to $3 billion, beating estimates by $230 million, thanks to strong derivatives results. Fixed income trading rose 5% to $4.8 billion, in line with the estimate.

But the bank had a $3.05 billion provision for loan losses in the quarter, above the $2.78 billion estimate, showing it expects more borrowers to default in the future. A rise in charge-offs and attempts to build up reserves for credit losses in the quarter was driven by the company’s massive credit card business, the bank said.

“JPMorgan has navigated a challenging interest rate environment very well,” said Octavio Marenzi, CEO of consultancy Opimas.

While banking and stock trading boosted results, “we’re seeing banking on Main Street starting to sputter,” Marenzi said. “Provisions for credit losses have increased significantly, which shows us that JPMorgan expects a difficult period in the US economy.”

Shares of JPMorgan fell 2% in morning trading.

Still, JPMorgan CFO Jeremy Barnum told reporters on a call Friday that he sees a “pretty healthy consumer” overall, despite some weakness in the lower income segment. About half of the increase in card reserves was tied to rising balances, he noted.

“The overall picture of write-offs right now is consistent with the story of normalization and not deterioration,” Barnum said. “Yes, the economy is slowing, but it looks like we’re in for a soft landing.”

Wells Fargo And Citi Group also posted a profit on Friday, while Goldman Sachs, bank of America And Morgan Stanley report back next week.

This story is developing. Check back later for updates.