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JPMorgan Chase's Strong Q2 Performance and Weaker Outlook

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JPMorgan Chase's Strong Q2 Performance and Weaker Outlook PART 1 OF 8

Why JPMorgan Chase Beat the Street on Core Banking in 2Q17

Core banking

JPMorgan Chase (JPM) beat estimates of $1.58 in earnings per share or EPS in 2Q17. It posted EPS of $1.82. The banking giant managed strong results in core banking, card sales, and asset management fees, which were partially offset by slowing trading revenues.

Why JPMorgan Chase Beat the Street on Core Banking in 2Q17

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Among other commercial banks (XLF), Citigroup (C) and Wells Fargo (WFC) also beat estimates, reflecting the continued strong run for core banking businesses. Bank of America (BAC) has yet to report its results.

Management’s view

In its press release of July 14, JPMorgan’s Chairman and CEO, Jamie Dimon, said, “We continued to post very solid results against a stable-to improving global economic backdrop. The U.S. consumer remains healthy, evidenced in our strong underlying performance in Consumer & Community Banking. Loans and deposits continue to grow strongly, and card sales and merchant processing volumes were up double digits, reflecting our consistent investment in the business.” He continued, “In the Corporate & Investment Bank, we maintained our leadership in Banking, while Markets revenue was down amid lower volatility and client activity.”

Loans and deposits help growth

JPMorgan posted revenues of $25.5 billion and managed revenues of $26.4 billion in 2Q17. The bank witnessed strong growth in loans and deposits of 9% and 10%, respectively, on a year-over-year basis. Although business slowed for the bank’s investment banking division, it maintained the lead among other investment bankers. It returned $4.5 billion to shareholders in the form of dividends and repurchases.

JPMorgan’s book value per share grew 5% to $66.05 with BASEL III Tier 1 Capital ratio of 12.5%, reflecting a strong balance sheet for future expansion and risk taking ability.

In this earnings series, we’ll study JPM’s performance across divisions, growth outlook, shareholder payouts, and valuations.

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