Double-digit revenue growth
JPMorgan Chase (JPM) registered double-digit revenue growth for two consecutive quarters. JPMorgan Chase has outperformed its peers in the commercial and investment banking businesses. In the second-quarter results reported on July 13, JPMorgan Chase’s revenues increased 10% YoY (year-over-year) to ~$28.4 billion and beat analysts’ estimate of $27.4 billion.
JPMorgan Chase noted that the increased interest rate spread, credit offtake, investment banking fees, and new assets drove the second-quarter top-line results. For the last few quarters, JPMorgan Chase maintained a lead compared to its top peers in credit offtake. JPMorgan Chase has a higher share of wallet fees in the investment banking space.
Other major banking peers (XLF) including Citigroup (C) and Bank of America (BAC) had 2%–7% credit growth in the second quarter. In contrast, Wells Fargo’s (WFC) credit offtake has fallen ~1% YoY. Wells Fargo is struggling with compliance and fraud-related issues.
The ongoing trade wars could result in higher volatility. If the Fed decides to slow down the pace of the rate hikes due to the trade wars, we could see better credit offtake prospects for bankers.
JPMorgan Chase’s lending improved in the first half of 2018. In the second quarter, core loans increased 7%, while deposits increased 5%. The bank’s credit card sales volume increased 11%, while the processing volume increased 12%. The YoY strong growth reflects a healthy job market, improving consumer confidence, and corporate expansion.
For the third quarter, Wall Street analysts expect JPMorgan Chase’s total loans to increase 6.6% YoY. The bank’s deposits are expected to increase 2.1% YoY. The total revenues are expected to be $27.7 billion—5.8% growth YoY.