The largest US bank by asset size, JPMorgan, posted strong earnings growth on the back of free reserve funds and a significant jump in investment banking revenues.
JPMorgan Chase & Co. (JPM) released its second quarter 2021 financial report (ended June) on Tuesday.
Overall, it was another successful quarter for the largest US bank, which is benefiting from the US economic recovery and the Fed’s permission to reduce reserves that were previously “frozen” to cover potential loan defaults during the pandemic.
JPMorgan’s earnings per share rose 174% year-on-year to $ 3.78 per share, beating the analyst average of $ 3.21 per share.
The bank’s quarterly profit rose to $ 11.9 billion from $ 4.7 billion a year earlier.
Revenue fell 5% from last year to $ 31.4 billion, but exceeded Wall Street’s expectations of $ 29.9 billion. JPMorgan’s quarterly revenue and earnings statistics for the last 2 years are available here.
The decline is attributed to the fact that JPMorgan’s earnings from fixed income markets (bond trading) fell sharply by 44% from last year. The segment’s revenue hit a record last year as there was increased activity at the time following the Federal Reserve’s actions to support markets in the early stages of the coronavirus pandemic.
At the same time, the growth was positive from:
JPMorgan’s revenues in stock markets – an increase of 13% to $ 2.7 billion, which turned out to be higher than analytical estimates;
consumer banking revenues rose 3.3% to $ 12.76 billion;
revenues from investment banking operations amounted to $ 3.4 billion, which is $ 300 million higher than analysts’ estimates.
“JPMorgan Chase has delivered solid performance as we generated more than $ 30 billion in revenue while continuing to make significant investments in technology, people and market expansion,” said CEO Jamie Dimon.
JPMorgan Chase, which is up 60% on the year and 22.5% YTD, is down 1.5% after the release of its quarterly report.
Wall Street’s other major bank, Goldman Sachs (GS), also posted strong results, with earnings per share jumping 140% to $ 15.02, $ 4.79 better than analysts’ estimates of $ 10.23. Revenue increased 25% to $ 15.39 billion from a forecast of $ 12.17 billion. Goldman Sachs quarterly revenues and earnings statistics for the last 2 years are available here.
Goldman Sachs shares are up 80% year-on-year and 42.6% YTD, and were down 1.2% after the report was published.
Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) will publish their reports on Wednesday.