trending Market Intelligence /marketintelligence/en/news-insights/trending/M1iZKAY_M6YpbRrMgoGSXw2 content esgSubNav
In This List

Jump in trading, loan demand, expense controls help JPMorgan beat Q2 expectations


Banking Essentials Newsletter: 7th February Edition

Case Study

A Bank Outsources Data Gathering to Meet Basel III Regulations


Private Markets 360° | Episode 8: Powering the Global Private Markets (with Adam Kansler of S&P Global Market Intelligence)


Banks’ Response to Rising Rates & Liquidity Concerns

Jump in trading, loan demand, expense controls help JPMorgan beat Q2 expectations

capitalizedon lofty trading volumes, steady loan demand and expense controls to generate asecond-quarter bottom linethat surpassed Wall Street's average expectation.

The NewYork-based banking giant, first among the nation's megabanks to post results, saidJuly 14 that, after making payments to preferred shareholders, it earned $5.67 billion in the second quarter. That was downfrom $5.78 billion a year earlier.

But, after excluding a legal benefit and an accounting adjustment,JPMorgan posted per-shareearnings of $1.46, according to Bloomberg. That was 3 cents better than theS&P Global consensus normalized EPS estimate.

Revenue increased nearly 3% from a year earlier to $25.2 billion,thanks in part to a 13% increase in trading, to about $6.5 billion, including a35% jump in fixed-income trading revenue. During a call with analysts to discussthe results, CFOMarianne Lake credited in part "materiallyhigher" trading volumes toward the end of the quarter, following the U.K.'sBrexit vote. U.K. residents on June 23 surprised markets by voting to leave theEuropean Union, causing a surge in trading.

Lake said JPMorgan also benefited from steady loan demand in bothits consumer and business banking businesses. Total loans climbed 10% from a yearearlier. Core loans, those the bank consider central to its ongoing growth, grew15%.

While a persistently low interest rate environment weighed onthe bank's net interestmargin — the NIM dipped 5 basis points during the quarter to 2.25% — low rates also helped bolster demand for mortgages andauto loans. Revenue in JPMorgan's consumer and community banking divisionrose 4% from a year earlier.

Consumers "are in verygood shape," Lake said. Low energy prices "continue to be a tailwind for consumers. The labor market continues tobe solid and improving. And sentiment is stillgood."

Businesses,by extension, are benefiting from consumer activity, and are borrowing to investin expansion efforts. Revenue generated by JPMorgan's commercial banking operation,which Lake said was boosted by higher lending levels, grew 4% from a year earlier.

Bolsteredby loan growth, net interest income of $11.7 billion wasup 6% from a year earlier.

Expenses,meanwhile, were held in check. Noninterest expenses of $13.6 billion were down 6%on lower legal costs and ongoing expense-reduction initiatives, the company said.

Sharesof JPMorgan were up more than 2% in early trading July 14.