Second-quarter profit at JPMorgan Chase ( JPM ) rose on a one-time accounting boost and a Wall Street revival, but another decline in a key revenue source demonstrated the challenges facing even the biggest U.S. bank.
Net income of $18 billion, up 25% from the same period a year ago, was driven by roughly $8 billion in gains from the exchange of credit card giant Visa’s ( V ) shares. Excluding those gains, JP Morgan earned $13.1 billion in the quarter.
Its investment banking results beat analysts’ expectations as fees from that business rose 50% from a year ago and 17% from the previous quarter to $2.35 billion. Mergers and acquisitions revenue rose to $785 million, its highest mark since the third quarter of 2022.
Those numbers hold up well for other big firms with sizable investment banking operations, such as Goldman Sachs ( GS ) and Morgan Stanley ( MS ).
But there are new signs of how even JPMorgan is struggling to maintain its external performance at a time of high interest rates, high deposit costs and weak credit demand.
A key measure of loan profitability, known as net interest income, fell 1% for the second straight quarter.
However, JP Morgan, excluding trading income, forecast its full-year net interest income of $91 billion. This is an increase of 2% from last year’s net interest income.
JPMorgan shares fell more than 1% in premarket trading.
JPMorgan CEO Jamie Dimon said, “While market valuations and credit spreads appear to reflect a benign economic outlook, we remain alert to potential tail risks,” citing geopolitical tensions and persistent inflationary forces.
“Inflation and interest rates may be higher than the market expects,” he said.
JPMorgan’s decision kicked off another earnings season for the U.S. banking sector, proving that lenders are positioned in the face of uncertainty about the U.S. economy, the path of monetary policy and the unknown outcome of this fall’s presidential election.
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