JPMorgan Chase reported second-quarter earnings and earnings that exceeded analysts’ expectations as the company released money for loan losses.
Here’s how the bank did it:
Earnings: $ 3.78 per share, exceeding Refinitiv’s estimate of $ 3.21 per share.
Revenue: $ 31.4 billion, exceeding estimate of $ 29.9 billion.
A key factor is that after the industry set aside tens of billions of dollars for loan losses last year, banks released reserves because borrowers resisted better than expected.
This is what happened at JPMorgan, the largest US bank in terms of assets, in the second quarter. The company posted a profit of $ 2.3 billion as it released $ 3 billion in loan loss reserves after taking $ 734 million in charges. The bank released $ 5.2 billion in reserves in the first quarter.
“Balance sheets for consumers and wholesalers remain exceptionally strong as the economic outlook continues to improve,” CEO Jamie Dimon said in the statement. “In particular, net expenses, down 53%, were better than expected, reflecting the increasingly healthy state of our customers and customers.”
Trading income was expected to decline from the period a year earlier, which saw frantic activity following Federal Reserve actions to support markets at the start of the coronavirus pandemic.
Fixed income trading generated $ 4.1 billion in revenue, slightly less than the estimate of $ 4.16 billion by analysts polled by FactSet. Equity trading generated $ 2.69 billion in revenue, beating the estimate of $ 2.31 billion. The combined figure was in line with Dimon’s forecast last month of “just north of $ 6 billion” in trading revenue.
The investment bank helped offset the drop in trading income. The company recorded $ 3.4 billion in investment banking revenue, exceeding the estimate of $ 300 million, on strength in merger and acquisition finance activity.
Analysts could ask Dimon about the bank’s succession planning after appointing two senior executives, Marianne Lake and Jennifer Piepszak, to lead the company’s sprawling consumer bank. The changes led to the promotion of Global Research Director Jeremy Barnum to CFO succeeding Piepszak; this is Barnum’s first quarter for the company’s earnings release.
Dimon could also be asked about his acquisition strategy after making the third purchase of a fintech start-up since December. Last month, the bank agreed to buy the ESG investment platform OpenInvest, CNBC first reported.
JPMorgan plunged less than 1% in pre-market trading after the earnings report. The bank’s shares have climbed 24% this year before Tuesday, topping the 17% rise in the S&P 500 index.
This story is developing. Please check for updates.
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