Wall Street’s biggest financials may post better results than expected this earnings season, as banks like JPMorgan Chase attempt to ramp up loans sales in the face of ultra-low interest rates, a well-known analyst told CNBC. Equity trading revenue for the quarter came in at $1.6 billion against analysts’ estimates of $1.59 billion, whereas fixed income trading revenues were recorded at $3.96 billion, representing 35% year-over-year (YoY) increase, against the expectations of $3.57 billion.
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JPMorgan Chase also increased its loan loss provisions, setting aside $1.4 billion in the second quarter compared to $935 million in the same period previous year. Investors had been bracing for a second-straight quarter of shrinking profits from JPMorgan as big banks grapple volatile markets and tough regulation.
Meanwhile, asset management net revenue fell 7 percent from past year to $2.9 billion, due to weaker markets, lower performance fees and lower brokerage activity.
New York-based JPMorgan is the nation’s second-largest bank by assets.
JPMorgan Chase showed an increase in earnings at a time when mortgage rates are near their all-time lows, which means banks are struggling to make a profit.
Some reports on Chase’s announcement noted that while workers will get raises of $2 or more per hour, Dimon hit the jackpot on his own compensation package past year after the bank posted $24.4 billion in profits.
The robust earnings were driven by a surge in trading revenue and loan growth.
JPMorgan is the first US bank to announce results for the quarter, as well as the first to report since Britain voted on June 23 to leave the European Union. The company said average core loans increased 16 percent from a year earlier.
Lake said overall credit quality in the USA remains strong. Stock-trading revenue edged up 1.5% to $1.6 billion. Amid the IPO drought, investment-banking fees fell 10% to $1.64 billion.
Jamie Dimon, JPMorgan’s CEO, said the results “reflected the strength of our balance sheet” in the face of “recent uncertainty and turbulence in the markets”. The oil and gas sector was largely to blame for the increase, the company said.
Net income declined from $6.29 billion in the year-ago quarter to $6.2 billion this year as the bank increased its provisions for loan losses. The Firm is engaged in investment banking, financial services.
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The bank did see a small positive trading bump at the end of June, both during and after the Brexit vote, JP Morgan CFO Marianne Lake told CNBC.
