JPMorgan Chase beats analysts' estimates on higher rates, better-than-expected bond trading
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JPMorgan Chase reported second-quarter earnings Friday that topped analysts' expectations, as the company benefited from higher interest rates and better-than-expected bond trading. Here's what the company reported: Earnings: $4.37 per share adjusted vs. $4 per share Refinitiv estimate

Revenue: $42.4 billion vs. $38.96 billion estimate Net income surged 67% to $14.5 billion, or $4.75 per share. When excluding the impact of its First Republic acquisition in early May — a $2.7 billion "bargain purchase gain" from the government-brokered takeover, as well as loan reserve builds and securities losses tied to the purchase — earnings were $4.37 per share. Revenue rose 34% to $42.4 billion as JPMorgan took advantage of higher rates and solid loan growth. Revenue gains were fueled by a 44% jump in net interest income to $21.9 billion, which topped the StreetAccount estimate by roughly $700 million. Average loans climbed 13%, while deposits fell 6%. "The U.S. economy continues to be resilient," CEO Jamie Dimon said in the earnings release. "Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong."

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the Bloomberg Global Business Forum in New York, on Wednesday, Sept. 25, 2019. Tiffany Hagler-Geard | Bloomberg | Getty Images

Dimon added that there were "salient risks in the immediate view" including dwindling consumer balances, the risk that interest rates would be higher for longer than expected, and geopolitical tension including the Ukraine war. JPMorgan increased its guidance for 2023 net interest income to $87 billion, which is $3 billion higher than its guidance from May and the bank's third increase to its NII forecast this year. Shares of the bank climbed about 2%.

Signs of strength

JPMorgan's retail banking division was its main source of strength this quarter. Profit surged 71% in the business to $5.3 billion on a 37% jump in revenue. The bank's results also benefited from better-than-expected trading and investment banking activity. In May, the bank said revenue from the Wall Street activities was headed for a 15% decline from a year earlier. But fixed income trading revenue only dipped 3% to $4.6 billion, topping the StreetAccount estimate by nearly $500 million. Equity trading revenue of $2.5 billion edged out the $2.41 billion estimate. And investment banking revenue of $1.5 billion topped the $1.42 billion estimate. "The results were outstanding and really showed strength across the board," said Octavio Marenzi, CEO of consultancy Opimas. "Consumer banking was particularly strong, but even investment banking, which has been a problem child over the past year or so, is starting to show signs of life." JPMorgan has been a standout recently on several fronts. Whether it's about deposits, funding costs or net interest income — all hot-button topics since the regional banking crisis began in March — the bank has outperformed smaller peers. That's helped shares of the bank climb 11% so far this year as of Thursday, compared with the 16% decline of the KBW Bank Index. When JPMorgan last reported results in April, its shares had their biggest earnings day increase in two decades.

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