JPMorgan’s Earnings Beat Estimates in Q2 as Investment Banking Revenue Surges

JPMorgan Chase (JPM) reported second-quarter results that surpassed analysts’ expectations, thanks in part to a surge in investment banking revenue on higher fees and a boost from an exchange of the company’s Visa shares.

The banking giant reported total revenue on a managed basis of $50.99 billion, well above analyst estimates and up about 20% from the second quarter of fiscal 2023. Investment banking revenue jumped 46% from last year to $2.5 billion thanks to higher fees, the company said.

The bank’s profit rose 25% from the same time last year to $18.15 billion, also beating projections, largely thanks to a $7.9 billion gain from an exchange of the company’s Visa (V) shares. Excluding the Visa shares-related boost and other items, profits were $13.1 billion, or $4.40 per share, below last year’s mark of $14.47 billion and $4.75 per share.

Net Interest Income Rises as Markets Await Rate Cuts

JPMorgan’s net interest income (NII), the money banks make on interest from loans after accounting for payments on accounts that generate interest, rose 4% from the same time last year and met analyst estimates compiled by Visible Alpha at $22.9 billion.

Banks and the broader markets have been closely monitoring data on inflation and employment this year as they could influence when the Federal Reserve decides to cut interest rates. Signs of cooling inflation could push the Fed to lower rates, which would bring down banks’ NII over the next year, analysts said ahead of Friday’s earnings report.

“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” JPMorgan CEO Jamie Dimon said. “Therefore, inflation and interest rates may stay higher than the market expects.”

JPMorgan shares were 1.9% lower at $203.54 as of 10:15 a.m. Friday following the release. They’ve gained close to 20% so far this year.