JPMorgan Chase (NYSE:JPM), the biggest U.S. bank by assets, reported a higher-than-expected second-quarter profit as the firm trimmed costs to offset falling trading revenue. Shares advanced in morning trading.
Net income rose to $6.29 billion, or $1.54 per share, for the June quarter, from $5.98 billion, or $1.46 per share, a year earlier, the New York-based company said in a statement today.
Analysts polled by Capital IQ had expected earnings of $1.44 per share.
Revenue fell 3.2 percent to $24.53 billion. Analysts had expected $24.49 billion. Trading revenue decreased 8.9 percent to $4.51 billion from $4.95 billion in the second quarter of 2014.
JPMorgan, like other banks, has been under pressure to cut costs because low interest rates have weighed on revenue for far longer than expected. In the meantime, regulators have demanded that banks hold more capital and hire additional staff to control risks and comply with regulations. JPMorgan said in May it would eliminate thousands of jobs and send back-office workers to cheaper locations to save money.
JPMorgan's non-interest expenses declined 6 percent to $14.50 billion in the quarter, helped by efforts to streamline its business as well as lower legal and mortgage banking expenses.
Return on equity, a measure of the J.P. Morgan’s profitability, came in at 11 percent for the second quarter, unchanged from the second quarter a year ago.
"We've made good progress this quarter, including meeting regulatory requirements, reducing non-operating deposits, and adding to our capital," chief executive officer Jamie Dimon said in a statement. "We are also on target to deliver on our expense commitments."
Shares inched up 0.5 percent to $68.43 at 9:58 a.m. in New York, expanding this year’s gain to 9.4 percent.
Earnings at the corporate and investment bank climbed 9.9 percent to $2.34 billion on a 15 percent drop in expenses to $5.14 billion. Revenue slipped 5.8 percent from a year earlier to $8.72 billion amid sluggish fixed-income trading.
Excluding the impact of year-ago business sales, fixed-income trading revenue fell 10 percent, which the company attributed to weakness in credit and securitized products, currencies and emerging markets, offset by strength in rates.
The firm posted $2.93 billion in fixed-income trading revenue, falling short of the $3.36 billion estimate from Wells Fargo & Co.’s Matthew Burnell and $3.45 billion from Harte.
Net income from consumer and community banking rose 1.5 percent to $2.53 billion as provisions for credit losses declined 18 percent to $702 million. Revenue was $11 billion, down 4.4 percent from a year earlier.
Mortgage revenue dropped 21 percent to $1.8 billion in the quarter on lower servicing revenue.
JPMorgan is the first U.S. bank with large capital markets and investment banking operations to report for the quarter. Wells Fargo, which also reported Tuesday, reported results that matched analysts' estimates but like JPMorgan (NYSE:WFC) saw lower revenue compared to a year ago.