US Markets
Friday, July 12th, 2024 2:28 pm EDT
Key Points
- Strong Financial Performance: JPMorgan Chase reported second-quarter earnings of $4.26 per share, adjusted, and revenue of $50.99 billion, both surpassing analysts’ expectations. Earnings rose 25% from the previous year, driven by a 52% surge in investment banking fees and strong equities trading results.
- Cautious Outlook: CEO Jamie Dimon highlighted potential future risks such as higher inflation and interest rates, geopolitical complexities, and various inflationary forces, despite current favorable stock and bond valuations.
- Increased Provisions for Credit Losses: The bank set aside $3.05 billion for credit losses, exceeding estimates, indicating expectations of higher borrower defaults in the future. This rise was primarily due to increased charge-offs and building loan loss reserves, especially in its large credit-card business.
JPMorgan Chase reported second-quarter earnings and revenue that surpassed analysts’ expectations, driven by a significant increase in investment banking fees. The bank posted earnings of $4.26 per share, adjusted, compared to the $4.19 estimate from analysts surveyed by LSEG. Revenue reached $50.99 billion, exceeding the $49.87 billion estimate, marking a 20% rise from the previous year. This increase was bolstered by higher-than-anticipated investment banking fees and equities trading results. The bank’s earnings rose 25% from the same period last year to $18.15 billion, or $6.12 per share, though excluding items related to its stake in Visa, profit stood at $4.26 per share.
CEO Jamie Dimon emphasized caution regarding future risks, such as potential inflation and interest rate hikes, despite current stock and bond valuations indicating a benign economic outlook. Dimon also highlighted the complexity and potential danger of the current geopolitical situation, which he described as the most perilous since World War II. He pointed out progress in reducing inflation but warned of ongoing inflationary pressures from factors like large fiscal deficits, infrastructure needs, trade restructuring, and global remilitarization.
The bank’s performance was buoyed by a rebound in Wall Street activities, particularly in advisory services. JPMorgan earned $2.3 billion in investment banking fees, surpassing StreetAccount estimates by approximately $300 million. Equities trading revenue rose 21% to $3 billion, exceeding estimates by $230 million, driven by strong derivatives results. Fixed income trading also increased by 5% to $4.8 billion, aligning with expectations. However, JPMorgan set aside $3.05 billion for credit losses, higher than the $2.78 billion estimate, reflecting an anticipation of increased borrower defaults. This rise in credit loss provisions was influenced by an increase in charge-offs and the need to build loan loss reserves, particularly within the bank’s substantial credit-card business.
Octavio Marenzi, CEO of consulting firm Opimas, commended JPMorgan for effectively navigating a challenging interest rate environment. Nonetheless, Marenzi noted concerns about the future, indicating signs of strain in consumer banking. He observed that the significant rise in provisions for credit losses suggests JPMorgan anticipates difficulties ahead for the U.S. economy.
Despite the positive earnings report, JPMorgan’s shares fell by 2% in morning trading. On the same day, Wells Fargo and Citigroup also released their earnings, while Goldman Sachs, Bank of America, and Morgan Stanley are scheduled to report the following week.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/07/12/jpmorgan-chase-jpm-earnings-q2-2024.html
