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Author: Anatol Antonovici
Senior Reporter
Anatol Antonovici

JPMorgan Sees Record Quarterly Profit

US banking giant JPMorgan released its financial results for the second quarter, reporting higher-than-expected earnings. The performance was driven by an income tax benefit that added $768 million.

JPMorgan’s Q2 Profits Surge 16%

The largest bank in the US reported second-quarter earnings of $9.65 billion, up 16% compared to the same period in 2018. This is a record income figure for the bank and is higher than analysts’ expectations. Thus, the $2.82 earnings per share (EPS) beat the estimate of $2.50 EPS. The company generated revenue of $29.57 billion, up 4% year-on-year and higher than the anticipated reading of $28.9 billion.

JPMorgan stated that it gained $0.23 per share from the resolution of certain tax audits.

CEO Jamie Dimon commented:

We had a strong second quarter and first half of 2019, benefitting from our diversified global business model. We continue to see positive momentum with the US consumer – healthy confidence levels, solid job creation and rising wages – which are reflected in our Consumer & Community Banking results.

JPMorgan Cut NII Forecast

However, despite the record earnings, the bank is under pressure. The company reduced its net interest income (NII) outlook for 2019, which is a significant contributor to the bank’s earnings. The NII forecast for the year was cut by $500 million to $57.5 billion. The stock price of the bank rose over 1% on Tuesday but lost this gain the next day.

The NII forecast is under pressure as the Federal Reserve hinted that it might cut its interest rate by the end of this month and that it might squeeze margins on JPMorgan’s core lending business.

The bank is anticipating three rate cuts from the Fed by the end of this year, chief finance officer Jennifer Piepszak told the media. At the end of last quarter, it had assumed no cuts. Nevertheless, if the Fed is sticking to a single rate cut, the bank’s NII could be higher than the forecast at $57.5 billion. She added:

The range of outcomes are incredibly broad in terms of the number of rate cuts, and if those rate cuts end up being insurance cuts that ultimately sustain the expansion or whether they end up being in response to real economic slowdown.

JPMorgan’s fixed-income trading unit generated $3.69 in revenue, up 7% and above analysts’ forecasts at $3.36. On the other side, the equities trading business produced $1.73 billion in revenue, which is 12% less than the last year reading and below estimates at $1.84 billion.

Investors closely watch JPMorgan as it’s the largest banking company by assets. Generally, bank stocks increased year-to-date, driven by their retail businesses.

Meet The Author
Anatol Antonovici
Anatol Antonovici
Senior Reporter

Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.

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