JPMorgan’s second-quarter profit rose as the bank cashed in on Visa shares, but higher interest rates also help results

KEN SWEET, Associated Press

12 minutes ago

FILE – A sign stands in front of a Wells Fargo bank branch April 17, 2024, in Littleton, Colo. Wells Fargo reports financial results Friday, July 12, 2024. (AP Photo/David Zalubowski, File)

NEW YORK (AP) — JPMorgan Chase’s profits rose sharply in the second quarter as the bank cashed in billions of dollars from its stake in Visa Inc. But the bank’s results were also helped by higher interest rates as well as consumers who seemed to still want to spend despite geopolitical and economic uncertainty.

The country’s largest bank by assets on Friday reported a profit of $18.15 billion, up 25% from a year earlier. On a per-share basis, JPMorgan earned $6.12 per share, beating analysts’ estimates.

A significant portion of JPMorgan’s results was a $7.9 billion gain from its stake in Visa. The bank converted its stake in the payment-processing giant into common stock in the second quarter. The bank also donated $1 billion of Visa stock to JPMorgan’s philanthropic arm.

Without a profit, profit fell from the year-earlier quarter due to higher costs. The bank set aside $3.1 billion to cover potentially bad loans, a significant increase from a year earlier as the bank acknowledged that delinquencies had increased among some Americans.

JPMorgan CEO Jamie Dimon reiterated his warnings about heightened geopolitical and inflation risks in a statement to investors. Dimon has said in several interviews that he believes Americans and the bank should prepare for inflation to remain higher than usual for longer than people expect.

“There has been some progress in containing inflation, but we still face many inflationary drivers: large fiscal deficits, infrastructure needs, trade restructuring and global rearmament,” he said.

The government’s latest reading of consumer prices on Thursday showed that price pressures were easing but remained above the levels favored by the Federal Reserve. Still, Wall Street is betting that the Fed has made enough progress in lowering inflation to lower interest rates at its September policy meeting.

Two other banks will report their results on Friday: Wells Fargo and Citigroup.

Wells Fargo earned $4.91 billion in the second quarter, or $1.33 per share, beating Wall Street targets and last year’s profit of $1.25 per share. Revenue of $20.7 billion also beat analysts’ forecasts and last year’s profit of $20.5 billion.

Wells said the increase in fee income helped offset declines in net interest income, which fell 9% to $11.9 billion. The San Francisco-based bank said average loans fell again to $917 million from $946 million a year ago as high interest rates kept many borrowers on the sidelines.

It was Wells Fargo’s second earnings report since the Biden administration eased some of the restrictions imposed on the bank following a series of scandals.

This article was co-authored by reporter Matt Ott in Washington.