JPMorgan Chase & Co. reported another strong quarterly result, but Chief Executive Officer Jamie Dimon reiterated his warning about some of the risks the bank remains vigilant about.
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The U.S. bank, the largest by assets, reported second-quarter earnings on Friday that showed net income of $18.1 billion, or $6.12 a share, up 25 percent from $14.5 billion a year ago. Wall Street analysts had expected profit of $17.3 billion, or $5.88 a share, according to FactSet.
The company reported sales of $50.2 billion for the three months ended June 30, well above analysts' expectations of $42.23 billion, according to data compiled by FactSet.
The global bank saw strong performance in several areas, resulting in strong growth: investment banking fees increased by 50%, market share rose to 9.5%, and Visa's initial public offering generated $7.9 billion in profits.
Despite the strong performance, Dimon again warned about geopolitical and macroeconomic challenges.
“While market valuations and credit spreads appear to reflect a rather benign economic outlook, we remain vigilant against potential tail risks,” he said in a statement. “These tail risks are the same ones we have mentioned previously: the geopolitical situation remains complex and potentially the most dangerous since World War II, with unknown consequences and impacts on the global economy.”
“Second, while some progress has been made in reducing inflation, there are still multiple drivers of inflation, including large fiscal deficits, infrastructure needs, trade reorganization, and global rearmament,” he continued. “As a result, inflation and interest rates may remain higher than markets expect. And finally, we still do not fully know what effects quantitative tightening of this magnitude will have.”
JPMorgan shares fell 1% in premarket trading on Friday after net interest income fell short of analysts' expectations and the bank said it increased its provision for loan losses.
There is little concern about whether the big banks can weather a prolonged period of high interest rates, which are expected to remain in the current range of 5.25% to 5.5% for at least a few more months as the central bank awaits its only cut this year. JPMorgan reported net interest income of $22.9 billion, up 4% from a year ago.
The bank reported $3.7 trillion in assets under management as of June 30, up 15% from a year ago, and continues to widen its lead over other big U.S. banks. Last year was its best year on record, with profits of $49.6 billion, including a $4.1 billion one-time gain from its acquisition of failed First Republic Bank in May 2023.
This is the first quarter that JPMorgan has reported complete results without separating out First Republic's contribution to its balance sheet, allowing the company's results to be compared to the prior year.
Late last month, JPMorgan announced plans to increase its quarterly dividend on its common stock to $1.25 per share from $1.15 per share for the third quarter of 2024. The board also approved a new $30 billion common stock repurchase program that began July 1. Dimon said the increase is supported by JPMorgan's “strong financial performance and represents a sustainable dividend level.”
The bank said it has a capital adequacy ratio of 15.3%, with surplus capital to account for new capital requirements that could come into effect by mid-2025. Following the results of the Federal Reserve's annual bank stress tests, JPMorgan said it could face higher losses than the central bank disclosed. As a result, the bank's capital adequacy requirements “will likely be slightly higher” to 12.3%, from the current 11.9%.