JPMorgan Chase & Co. and Wells Fargo & Co. both posted stronger-than-expected profits on Friday in a sign that the U.S.’s largest banks managed to prosper despite turmoil in regional banks.
JPMorgan Chase
JPM,
stock is up 3%, while Wells Fargo
WFC,
moved higher by 3.3% toward a three-month high, while Citigroup Inc.
C,
rose by 2% ahead of its second-quarter update.
“Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly,” JPMorgan CEO Jamie Dimon said in a prepared statement. “Labor markets have softened somewhat, but job growth remains strong.”
JPMorgan Chase’s earnings for the three months ended June 30 increased to $14.47 billion, or $4.75 a share, from $8.65 billion, or $2.76 a share in the year-ago quarter. Wall Street analysts had expected JPMorgan Chase to earn $3.97 a share, according to estimates compiled by FactSet.
JPMorgan Chase’s second-quarter revenue rose to $41.31 billion from $30.72 billion. Managed revenue rose to $42.4 billion from $31.6 billion. Analysts were looking for revenue of $38.66 billion.
The bank also lifted its 2023 view for net interest income and net interest income excluding markets to about $87 billion, up from its earlier estimate of about $81 billion.
JPMorgan booked a net after-tax gain of $1.8 billion related to its acquisition of First Republic during the quarter, as the third large regional bank to go bust this year after Silicon Valley Bank and Signature Bank.
“Almost all of our lines of business saw continued growth in the quarter,” Dimon said.
JPMorgan Chase’s corporate and investment bank unit’s banking fees remained challenged, although the bank’s market share increased, he said.
JPMorgan’s $2.9 billion in credit costs included a $1.5 billion net reserve build and $1.4 billion of net charge-offs.
“There are still salient risks in the immediate view,” Dimon said. “Consumers are slowly using up their cash buffers, core inflation has been stubbornly high (increasing the risk that interest rates go higher, and stay higher for longer), quantitative tightening of this scale has never occurred, fiscal deficits are large, and the war in Ukraine continues, which in addition to the huge humanitarian crisis for Ukrainians, has large potential effects on geopolitics and the global economy.”
Prior to Friday’s moves, JPMorgan Chase stock was up 11% in 2023, compared to a 17.5% increase by the S&P 500
SPX,
and a 3.8% year-to-date increase by the Dow Jones Industrial Average
DJIA,
JPMorgan Chase is one of the 30 components of the DJIA.
Meanwhile, Wells Fargo said it benefitted from higher interest rates and loan balances that provided a boost to net interest income.
Net income rose to $4.94 billion, or $1.25 a share, from $3.14 billion, or 75 cents a share, in the year-ago period. That beat the FactSet consensus for earnings per share of $1.16.
Total revenue grew 20.5% to $20.53 billion, above the FactSet consensus of $20.11 billion, as net interest income jumped 29.1% to $13.16 billion to beat expectations of $12.82 billion.
Provision for credit losses nearly tripled to $1.71 billion from $580 million.
Average loans increased 2.1% to $945.9 million while average deposits fell 6.8% to $1.35 billion.
The stock has rallied 10.3% over the past three months through Thursday, while the S&P 500 SPX, +0.85% has gained 9.0%.
Tomi Kilgore contributed to this report,
This story originally appeared on Marketwatch
