JPMorgan profit climbs

Earnings

NEW YORK (Bloomberg) – JPMorgan Chase has reported second-quarter profit that beat analysts’ estimates as higher revenue from investment banking and trading overcame a drop in fees from mortgage lending.

Second-quarter net income at the largest US bank by assets rose to US$6.5 billion from $4.96 billion in the same period a year earlier, the New York-based company said in a statement.

Chief Executive Officer Jamie Dimon, 57, has led JPMorgan to record earnings over the past three years as the US Federal Reserve’s stimulus boosted the economy and bank profits. Concern that the Fed will pare bond purchases lifted long-term borrowing costs during the quarter.

“Their investment bank did very, very well, but they want to see core earnings going up, they want to see that balance sheet making money,” said Paul Miller, an analyst at FBR Capital Markets. Instead, the net interest margin “contracted, loan growth was relatively flat”.

Chief Financial Officer Marianne Lake estimated that demand for mortgage refinancings could drop 30 per cent to 40 per cent in the second half. The bank may accelerate a job-cut programme announced earlier in the year, she added.

JPMorgan’s profits in the quarter benefited from an improvement at the unit that lost $4.4 billion on wrong-way derivatives bets in last year’s second quarter.

Another contributor was the release of $1.39 billion in reserves that had been set aside to cover future loan losses.

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