JPMorgan Chase on Tuesday reported second-quarter earnings and revenue that exceeded analyst expectations as the banking giant released funds for loan losses.
Here are the numbers:
Merits: $ 3.78 per share versus $ 3.21 per share estimate in a refinitive analyst poll.
Revenue: $ 31.4 billion versus the estimate of $ 29.9 billion.
A key factor is that after the industry allocated tens of billions of dollars for loan defaults last year, banks released reserves as borrowers held up better than expected.
It did so in the second quarter at JPMorgan, the largest US bank by assets. The company saw a $ 2.3 billion increase in releasing $ 3 billion in loan loss reserves after taking $ 734 million in write-downs. The bank had a reserve release of $ 5.2 billion in the first quarter.
“Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve,” said CEO Jamie Dimon in the press release. “In particular, the net write-offs were better than expected with a decline of 53% and reflect the increasingly healthy state of our customers and customers.”
The bank said the improving US economic outlook prompted its decision to release funds earmarked for credit losses, mainly from credit card and retail mortgage reserves.
Trading revenues were down 30% year-over-year, an expected result after the hectic activity following the Fed’s measures to support markets in the early stages of the coronavirus pandemic.
Fixed income trading had sales of $ 4.1 billion, just below the FactSet surveyed analyst estimate of $ 4.16 billion. Stock trading generated revenue of $ 2.69 billion, beating the estimate of $ 2.31 billion. The combined number matched Dimon’s forecast last month of “just north of $ 6 billion” in trade revenue.
Investment banking helped offset the decline in trading revenues. The company had $ 3.4 billion in investment banking revenue, up $ 300 million on estimate due to merger activities and acquisition financing.
During a conference call on the results, analysts could ask Dimon about the bank’s succession planning after she appointed two executives, Marianne Lake and Jennifer Piepszak, to lead the company’s sprawling consumer bank. The changes resulted in the promotion of Global Research Director Jeremy Barnum to CFO to succeed Piepszak; This is Barnum’s first quarter covering the company’s earnings release.
After buying a fintech start-up for the third time since December, Dimon could also be asked about his acquisition strategy. Last month, the bank agreed to buy the ESG investment platform OpenInvest, CNBC first reported.
JPMorgan lost 2.6% on Tuesday’s earnings report. The bank’s stocks are up 24% this year ahead of Tuesday, outperforming the 17% gain in the S&P 500.
Wall Street rival Goldman Sachs released results Tuesday that slightly exceeded expectations, aided by strong revenues from Wall Street advisory activities.
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