JPMorgan, the biggest US bank by asset size, posted strong earnings growth on the back of a release of reserve funds and a significant jump in investment banking revenues.
JPMorgan Chase Co. (JPM) published its financial report for the second quarter of 2021 (ended June) on Tuesday.
Overall, it was another successful quarter for the biggest US bank, which is benefiting from the US economic recovery and the Federal Reserve's permission to reduce the amount of reserve funds previously "frozen" to cover potential loan defaults during the pandemic.
JPMorgan's earnings per share rose 174% from a year ago to $3.78 per share, beating analysts' average estimate of $3.21 per share.
The bank's quarterly profit rose to $11.9 billion from $4.7 billion a year earlier. Earnings fell 5 percent from a year ago to $31.4 billion, but beat Wall Street expectations of $29.9 billion.
The decline is because JPMorgan's revenue from fixed-income markets (bond trading) fell sharply by 44% from last year. Last year, revenue in this segment was a record high as there was increased activity at the time following the Federal Reserve's action to support markets in the early stages of the coronavirus pandemic.
At the same time, there was positive growth from:
- JPMorgan's stock markets revenues up 13% to $2.7bn, which was above analyst estimates;
- consumer banking revenues up 3.3% to $12.76 billion;
- investment banking revenues were $3.4 billion, $300 million above analysts' estimates.
Shares of JPMorgan Chase, up 60% year to date and 22.5% YTD, were down 1.5% after the quarterly report.
Another major Wall Street bank, Goldman Sachs (GS) also posted strong results, with earnings per share jumping 140% to $15.02, $4.79 better than analysts' estimate of $10.23. Earnings rose 25% to $15.39bn, compared with a forecast of $12.17bn.
Goldman Sachs shares were up 80% for the year and 42.6% YTD, with the stock also down 1.2% after the report was released.