JPMorgan is the first of the major USA banks to report quarterly results. That’s worth noting because a boost in earning assets means a bank can better endure a lengthy period of low interest rates. The ensuing market tumult has driven interest rates to historically low levels. “The impact on global growth and the United States will be small”.
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The raise would not flow to JPMorgan’s bankers and top executives, many of whom already make millions a year.
Earnings at the investment and corporate bank climbed over 6.5% to more than $2.49 billion as its revenue increased over 5.1% from the same period a year earlier. The bank’s equity trading increased by 1.5% to end the quarter at $1.6 billion. Wall Street had been expecting earnings of $1.43 a share, according to a survey of analysts by Thomson Reuters.
Revenue for the second quarter rose 2.8% to $25.2 billion, which beat the Bloomberg estimate of $24.5 billion. J.P. Morgan has continued to face more forceful questions from analysts and shareholders over the past year over whether it might be better for investors if the global bank broke itself up into smaller, more manageable units.
In the short term, that could be good news for banks’ trading revenues, but the long term impacts are less rosy.
Commercial net revenue was $1.8 billion, an increase of 4%, reflecting higher net interest income from higher average loan balances and deposit spreads. Investors had been bracing for a second-straight quarter of shrinking profits from JPMorgan as big banks grapple volatile markets and tough regulation. So far in the third quarter, trading volumes have been “fine”, but a normal seasonal decline is expected, Lake said. Revenue fell 7.4 percent to $2.94 billion on weaker markets and lower performance fees. Provision for credit losses increased from $935 million to $1.4 billion on the back of the reserve increases versus releases in the year-ago quarter and greater net-charge-offs.
The average revenue estimate is fixed at $1.06B for next year based on the thoughts of 9 Analysts. And mortgage revenue is expected to strengthen in coming quarters thanks to low rates.
Is energy lending stabilizing for the big banks? Previously around 40% of consumers topped a 760 credit score and now 20% to 30% fall below 700 credit scores.
Average core loans were up 16% from past year, and 3% from last quarter.
The trading activity around the British exit vote appears to have helped the results from JPMorgan’s trading divisions, and particularly its bond and fixed-income units.
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Delta Air Lines gained 1.7 per cent as it reported a 4.1 per cent rise in second-quarter net income to US$1.5 billion and said it would trim some capacity on its U.S. flights to Britain after the Brexit vote. Notably, the results included a legal benefit of $430 million.
