JPMorgan Chase & Co. (NYSE:JPM), the largest U.S. bank by assets, advanced in premarket trading after posting a 31 percent gain in second-quarter profit, beating analysts’ estimates, as revenue from trading stocks and bonds climbed and provisions for bad loans dropped.
The shares rose 0.8 percent to $55.60 at 8:31 a.m. in New York on Friday, headed to extend this year's gain of 25.4 percent.
Net income in the three months ended June 30 increased to $6.5 billion, or $1.60 a share, from $4.96 billion, or $1.21 a share, a year earlier, the New York-based company said in a statement on Friday.
The average estimate of 29 analysts surveyed by Thomson/Reuters was for adjusted earnings of $1.44 a share.
Quarterly revenue grew 13 percent to $26 billion, above the 24.8 billion forecast by 21 analysts on average.
Trading revenue grew 18 percent to $5.4 billion in the April-to-June period, reflecting better performance in credit and equities products, the lender said.
JPMorgan earned all-time profits in each of the past three years as the Federal Reserve’s stimulus boosted the economy and the banking industry’s results. Worries that the Fed will begin shaving bond purchases used to stimulate growth bolstered long-term interest rates during the second quarter and might have damped earnings growth at some banks. JPMorgan shares have strengthened 41 percent over the past three years.
The bank said it cut the allowance for loan losses in consumer and community banking in the second quarter by of $1.5 billion.
Credit card sales increased 10 percent to a lifetime high of $105.2 billion.
Mortgage banking income, which comes from making home loans and servicing existing mortgages, slid 14 percent to $1.1 billion as a refinancing wave faded and interest rates increased.
The corporate and private equity division lost $522 million in the latest quarter.
Consumer deposits rose 10 percent at the end of the period, compared with a year earlier.
Loan balances rose to a record $86 billion, but the bank quoted its chief executive officer, Jamie Dimon, as saying "loan growth across the industry continued to be soft, reflecting a cautious stance by consumers, many small businesses and corporations."
"However, we continue to see broad-based signs that the U.S. economy is improving and we are hopeful that, as jobs are added and confidence builds, the U.S. economy will strengthen over time.”
JPMorgan was the first U.S. bank to report second-quarter earnings. It was followed by Wells Fargo & Co. (NYSE:WFC), the country’s biggest mortgage originator, which posted a higher-than-expected 20 percent rise in quarterly profit on Friday as it set aside less money to cover bad loans. Citigroup Inc. (NYSE:C) and Goldman Sachs Group Inc. (NYSE:GS) will release their quarterly earnings reports on Monday.
JPMorgan was also the second Dow member to report quarterly earnings this season. On Monday, Alcoa Inc. (NYSE:AA), the biggest U.S. aluminum producer, reported better-than-expected adjusted earnings per share.