JPMorgan’s second-quarter profit rose 25% on one-time gains and Wall Street’s rebound

JPMorgan Chase’s (JPM) second-quarter earnings rose sharply on the back of a one-time accounting boost and a Wall Street rebound, but another decline in a key revenue source demonstrated the challenges facing even the largest U.S. bank.

Net income of $18 billion was up 25% from the same period a year ago, thanks largely to a stock swap in credit card giant Visa (V), which netted about $8 billion in profits. Excluding these gains, JPMorgan earned $13.1 billion this quarter.

Investment banking results exceeded analyst expectations as fees for that business rose 50% from last year and 17% from the previous quarter to $2.35 billion. Mergers and acquisitions revenue rose to $785 million, the highest since the third quarter of 2022.

These figures bode well for other large institutions with extensive investment banking activities, such as Goldman Sachs and Morgan Stanley.

But there were also new signals that even JPMorgan is struggling to maintain its extraordinary performance during an extended period of high interest rates, high deposit costs and weak loan demand.

A key measure of lending profits, known as net interest income, fell 1% for the second consecutive quarter.

Shares of JPMorgan fell slightly in pre-market trading.

JPMorgan, however, is sticking to its full-year net interest income forecast of $91 billion, excluding trading income.

That would represent a 2% increase over the net interest income it collected last year.

JPMorgan CEO Jamie Dimon said “while market valuations and credit spreads appear to reflect a fairly favorable economic outlook, we remain vigilant about potential tail risks,” citing geopolitical tensions and persistent inflationary forces.

“Inflation and interest rates may remain higher than the market expects,” he said.

JPMorgan’s result heralded a new earnings season for the U.S. banking sector as lenders sought to prove they remain resilient in the face of uncertainty about the U.S. economy, the path of monetary policy and the unknown outcome of this fall’s presidential election .

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