JPMorgan’s second-quarter profit beat estimates, as investment banking revenue rose sharply

Key conclusions

JPMorgan Chase reported second-quarter results that exceeded analysts’ expectations.
The banking giant reported revenue of $50.99 billion from managed operations, topping analyst estimates as investment banking revenue rose on higher fees.
The bank’s profit rose 25% from the same period last year to $18.15 billion, beating expectations. That was largely due to a $7.9 billion gain from the exchange of Visa shares.

JPMorgan Chase (JPM) reported second-quarter results that beat analysts’ expectations, driven in part by growth in investment banking revenue thanks to higher fees and support from a Visa stock swap.

The banking giant reported total revenue of $50.99 billion under management, significantly exceeding analyst estimates and representing an increase of about 20% compared with the second quarter of fiscal 2023. Investment banking revenue rose 46% from a year ago to $2.5 billion, driven by higher fees, the company said.

The bank’s profit rose 25% from the same period last year to $18.15 billion, also topping forecasts, largely thanks to a $7.9 billion gain from the exchange of Visa (V) stock. Excluding the increase related to Visa stock and other items, profits came to $13.1 billion, or $4.40 per share, below last year’s result of $14.47 billion, or $4.75 per share.

Net interest income rises as markets look ahead to interest rate cuts

JPMorgan’s net interest income (NII), the amount banks earn in interest on loans after taking into account payments on interest-bearing accounts, rose 4% from the same period last year to $22.9 billion, in line with analyst estimates compiled by Visible Alpha.

Banks and broader markets have been closely monitoring inflation and employment data this year because they could influence the Federal Reserve’s decision to cut interest rates. Signs of lower inflation could prompt the Fed to cut rates, which would lower banks’ NII over the next year, analysts said ahead of Friday’s earnings report.

“There has been some progress in lowering inflation, but there are still many inflationary forces ahead: large fiscal deficits, infrastructure needs, trade restructuring and global rearmament,” said JPMorgan CEO Jamie Dimon. “That’s why inflation and interest rates could remain higher than the market expects.”

JPMorgan shares were down 1.9% at $203.54 as of 10:15 a.m. Friday after the report. They have gained nearly 20% this year.