NEW YORK (AP) — JPMorgan Chase & Co.'s profits soared in the second quarter as the bank liquidated billions of dollars in its stake in Visa Inc. But the bank's results were also buoyed by consumers' continued willingness to spend despite rising interest rates and geopolitical and economic uncertainty.
The nation's largest bank by assets reported profits of $18.15 billion on Friday, up 25 percent from a year ago. Earnings per share of $6.12 beat analyst expectations.
A big part of JPMorgan's performance was a $7.9 billion gain on its Visa shares, as the bank converted its stake in the payment processing giant into common stock in the second quarter. The bank also donated $1 billion of Visa stock to JPMorgan's charitable foundations.
Excluding that gain, profit was down from a year ago due to higher expenses.The bank acknowledged that delinquencies were rising among some Americans and set aside $3.1 billion to cover potential bad loans, a big increase from a year ago.On a conference call with reporters, executives said they remained unconcerned about rising delinquencies, adding that U.S. consumers were doing well.
In a statement to investors, JPMorgan Chief Executive Officer Jamie Dimon repeated his warnings about geopolitical risks and rising inflation. In several interviews, Mr. Dimon has said he thinks Americans and banks should prepare for inflation to continue for longer and at higher than normal levels than people expect.
“While some progress has been made in containing inflation, there are still multiple drivers of inflation, including large fiscal deficits, infrastructure needs, trade reorganization and global rearmament,” he said.
The government's latest consumer price index, released Thursday, showed price pressures are easing but still above the level the Federal Reserve would like to see. Still, Wall Street expects the Fed to have made enough progress in taming inflation that it will cut interest rates at its September policy meeting.
Two other banks, Wells Fargo and Citigroup, also report results on Friday.
Wells Fargo earned $4.91 billion, or $1.33 a share, in the second quarter, beating Wall Street expectations and the $1.25 a share it earned last year. Revenue of $20.7 billion also beat analyst expectations and the $20.5 billion it earned last year.
Wells said rising fee income helped offset a decline in net interest income, the difference between the profit it makes on loans and the amount it pays out to depositors. Net interest income fell 9% to $11.9 billion. The figure missed Wall Street expectations and sent the bank's shares down more than 5% in premarket trading.
The San Francisco bank said its average loan size fell again to $917 million from $946 million a year ago as rising interest rates discouraged many borrowers from taking out loans.
This was Wells Fargo's second earnings report since the Biden administration eased some of its restrictions following a series of scandals.
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Writer Matt Ott in Washington contributed.