JPMorgan ChaseThe investment banking division posted its best quarterly performance as the unprecedented performance of dealmaking in the first half boosted profits. However, the company's share price fell as expenses rose and loans were still far from growing.
Fees for M & An advisers and stock and bond underwriting surged 25 per cent in the second quarter, beating analysts' expectations and bringing net profit to $11.9 billion. But non-interest expenses rose 4 per cent year-on-year, more than analysts expected, and the bank said it planned to spend $1 billion more than its previously announced forecast. The share price fell 1.2%.
JPMorgan Chase's results kicked off the banking earnings season as a glimpse into the resumption of the U. S. economy. The market volatility caused by the COVID-19 epidemic has led to several remarkable quarters for Wall Street trading desks, and although the current performance has been a bit muted, there has been a surge in mergers and acquisitions in the first six months of 2021.
Adam Crisafulli, an analyst at Vital Knowledge, said the results were "a bit disappointing" because profits were dependent on investment banking and credit.Business, this trend is not sustainable.
Lending has proved difficult to grow because consumers and companies with government stimulus money have not yet sought additional financing. JPMorgan's total loans were flat year-on-year, while loans from both the consumer and business sectors fell. Weak demand for loans is usually a negative signal for banks, but industry executives say it proves that consumers and companies are financially sound as they shake off epidemic restrictions.
JPMorgan released $3 billion in provisions for bad debt losses, almost twice as much as analysts had expected. While this is directly related to profits, CEO Jamie Dimon played down the impact.
"as the environment continues to improve, we have once again benefited from the release of a large number of provisions this quarter, but as we have said before, we do not regard this as core or recurrent profits," Dimon said in a statement on Tuesday.
The bank's second-quarter trading revenue was $6.8 billion, down 30% from a year earlier, but higher than analysts' expectations of $6.4 billion.