Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., at the U.S. Capitol for a luncheon meeting with the New Democrat Coalition in Washington, DC, U.S., on Tuesday, June 6, 2023.
Nathan Howard | Bloomberg | Getty Images
JPMorgan Chase on Friday reported second-quarter results that beat analyst expectations as the company benefited from higher interest rates and growing interest income.
Here’s what the company reported:
- Earnings: $4.37 per share adjusted versus $4 per share Refinitiv estimate
- Revenue: $42.4 billion versus an estimate of $38.96 billion
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Net income increased 67% to $14.5 billion, or $4.75 per share. Excluding the impact of the First Republic acquisition in early May — a $2.7 billion “bargain gain” from the government-brokered acquisition, as well as the build-up of loan reserves and securities losses associated with the purchase — earnings were $4. 37 per share.
Revenue increased 34% to $42.4 billion as JPMorgan benefited from higher rates and solid loan growth. Revenue growth was fueled by a 44% increase in net interest income to $21.9 billion, surpassing StreetAccount’s estimate by about $700 million. Average loans increased by 13%, while deposits fell by 6%.
Shares of the bank rose more than 2% in premarket trading.
JPMorgan has been a standout on several fronts lately. Whether in terms of deposits, borrowing costs or net interest income – all hot-button topics since the start of the regional banking crisis in March – the bank outperformed smaller peers.
That has contributed to the bank’s shares rising 11% year-to-date, compared to the KBW Bank Index’s 16% decline. When JPMorgan last reported results in April, its stock had its biggest gains in two decades.
This time, JPMorgan had the advantage of owning First Republic for most of the quarter.
The acquisition, which added about $203 billion in loans and securities and $92 billion in deposits helped JPMorgan cushion some of the headwinds the industry was facing. Banks lose cheap deposits as customers find places with higher yields to park their money, driving up the industry’s borrowing costs.
This puts pressure on the industry’s profit margins. Last month, several regional banks reported lower-than-expected interest earnings, and analysts expect more banks to do the same in the coming weeks. In addition, banks are expected to announce a slowdown in loan growth and rising costs associated with commercial real estate debt, all of which are weighing on corporate results.
Lenders have begun setting aside more loan loss provisions amid expectations of a slowing economy this year. JPMorgan is expected to book a $2.72 billion loan loss provision, according to StreetAccount’s estimate.
The bank will not be able to avoid the downturn in other areas, namely the slowdown in commercial and investment banking activities. In May, JPMorgan said revenue from those Wall Street businesses was down 15% from a year earlier.
Finally, analysts will want to hear what JPMorgan CEO Jamie Dimon has to say about the health of the economy and his expectations for banking regulation and consolidation.
Wells Fargo also reported earnings on Friday, and Citi group results are on deck. bank of America And Morgan Stanley report Tuesday. Goldman Sachs announces the results on Wednesday.
This story is evolving. Check back later for updates.