JPMorgan profit beats estimates on strength in consumer banking

Higher interest income, modest increase in loans makes for lower activity at trading desk

JP Morgan headquarters in New York. Photograph: Eduardo Munoz/Reuters

JP Morgan headquarters in New York. Photograph: Eduardo Munoz/Reuters

 

JPMorgan Chase & Co, the world’s biggest bank, reported a better-than-expected quarterly profit on Tuesday as higher interest income and a modest increase in loans more than made up for lower activity at the bank’s trading desks.

Trading volumes have been lower at large US banks as a tit-for-tat tariff war between Beijing and Washington kept investors on edge. A flattening of the yield curve and rising bets of an interest rate cut have also challenged banks’ ability to boost revenues.

Average loans at the largest US bank, however, increased 2 per cent on the back of an 8 per cent rise in credit card loans.

“We continue to see positive momentum with the U.S. consumer - healthy confidence levels, solid job creation and rising wages - which are reflected in our Consumer & Community Banking results,” chief executive Jamie Dimon said in a statement.

Income from the bank’s consumer and community banking, its largest business, rose 22 per cent to $4.17 billion, offsetting declines across its other main businesses.

Total net interest income, the difference between what banks pay on deposits and earn on loans, rose 7 per cent to $14.40 billion.

Investors, however, worry that if the US Federal Reserve cuts interest rates in July, it could pressure margins at banks, which have benefited recently from higher rates.

Net income at the bank rose 16 per cent to $9.65 billion. Excluding the tax gain, it earned $2.59 per share. Net revenue rose 4 per cent to $29.57 billion.

Analysts were expecting earnings of $2.50 per share and revenue of $28.90 billion, according to IBES estimate from Refinitiv.

JPMorgan’s results are closely watched by investors looking to gauge the health of the US economy. Goldman Sachs and Wells Fargo will report quarterly results later in the day. – Reuters