JPMorgan’s Q2 earnings beat forecasts as investment banking revenue surges 91%

  • JPMorgan Chase reported second-quarter earnings Tuesday that beat Wall Street’s revenue and profit forecasts, reflecting strong gains in its corporate and investment bank division.
  • Investment-banking revenue surged 91%, fixed-income markets revenue roughly doubled, and equity-markets revenue rose 38%.
  • “We are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm,” CEO Jamie Dimon said in the earnings release.
  • The bank’s shares climbed 1.9% in premarket trading.
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JPMorgan Chase reported second-quarter earnings on Tuesday that beat the consensus estimates of analysts polled by Bloomberg, reflecting strong growth in investment-banking fees and trading revenues.

The banking titan’s net revenue rose 15% to $33.8 billion, but its efforts to shore up its credit reserves meant its net income tumbled 51% to about $4.7 billion.

The relatively robust results sent JPMorgan’s shares up 1.9% in pre-market trading.

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Here are the key numbers:

  • Net income: $4.69 billion versus $3.27 billion estimated
  • Earnings per share: $1.38 versus $1.01 estimated
  • Revenue: $33.8 billion versus $30.6 billion estimated

“We earned $4.7 billion of net income in the second quarter despite building $8.9 billion of credit reserves because we generated our highest quarterly revenue ever, which demonstrates the benefit of our diversified global business model,” CEO Jamie Dimon said in the earnings release.

Dimon highlighted “much uncertainty” around the current economic outlook, but trumpeted JPMorgan’s strong finances.

“We are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm,” he said.

“We ended the quarter with massive loss-absorbing capacity — over $34 billion of credit reserves and total liquidity resources of $1.5 trillion, on top of $191 billion of common-equity tier 1 capital, with significant earnings power that would allow us to absorb even more credit reserves if needed,” he added.

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JPMorgan’s corporate and investment bank was its standout segment. Net revenue soared 66% there to a record $16.4 billion as investment-banking revenue surged 91% and markets revenue jumped 79%. The latter gain reflected a 99% rise in fixed-income revenues and a 38% increase in equity revenues.

The division’s revenue growth fueled an 85% increase in its net income to $5.5 billion.

Net revenue also rose 5% in JPMorgan’s commercial banking unit and 1% in its asset and wealth management division.

However, the commercial banking division swung from $1 billion in net income in the second quarter of last year to a net loss of $691 million, reflecting a $2.4 billion provision for credit losses.

Net income also fell 8% in the asset and wealth management division due to roughly $220 million in similar provisions.

Meanwhile, JPMorgan’s consumer and community banking division posted a 9% drop in net revenue, as consumer and business banking revenues slumped 26%.

It also boosted its credit-loss provision by $4.7 billion to over $5.8 billion, resulting in a net loss of $176 million, compared to $4.2 billion in net income in the same period last year.

JPMorgan’s earnings fell more than 70% in the first quarter as it built up credit reserves in response to the coronavirus pandemic. It also reported a plunge in net income to $2.9 billion, its lowest level since 2013.

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