JPMorgan Chase Beat Second-Quarter Earnings Estimates

Core banking performance

JPMorgan Chase (JPM) beat the EPS estimates of $2.22 in the second quarter and posted an EPS of $2.29—25.8% growth on a YoY (year-over-year) basis. The bank benefited from loan book expansion, which resulted in net interest income growth of 9% and non-interest income growth of 4%. In line with the expectations, JPMorgan Chase’s revenues and net income declined sequentially due to weaker trading revenues partially offset by growth in the community banking, commercial banking, and asset management businesses.

JPMorgan Chase’s lending activity improved from the first quarter with sequential growth of 2% in core loans and 7% growth on a YoY basis. In comparison, deposits grew 5% as deployments increased towards equities and instruments.

JPMorgan Chase Beat Second-Quarter Earnings Estimates

Trading activity

Volatility has remained buoyant in the second quarter despite falling from the peaks in the first quarter due to growth uncertainties, contradicting macro data, expectations from trade wars, and monetary cycles. On a YoY basis, JPMorgan Chase’s fixed-income trading rose 12% to $3.5 billion, while equity trading rose 24% to $2.0 billion. The growth came from product offerings in cash markets and derivatives. Overall trading revenues stood at $6.5 billion—down from $7.5 billion in the first quarter.

Other major bankers (XLF) that are scheduled to report today include:

  • Citigroup (C): expected growth in lending, interest income
  • Wells Fargo (WFC): expected commentary on compliances and growth plans

Bank of America (BAC) is scheduled to report its earnings on July 16. The growth in core lending is expected to be higher than the industry averages.

Retail growth

JPMorgan Chase’s Consumer and Community Banking segment posted net income growth of 53% and revenue growth of 10% on a YoY basis. The segment saw credit card sales volume growth of 11% and processing volume growth of 12%. Core retail banking managed 17% growth due to rate spreads, retail loans, and higher deposit growth.

The bank has been aggressively investing in technology for higher penetration and improving operating efficiency in trading, retail banking, and advisory services, which resulted in margin expansion. The bank managed a return on equity of 14% in the second quarter.