JPMorgan's Q2 profit more than doubles although trading activity drops

JPMorgan Chase & Co reported its profit grew two and a half times on Tuesday, bolstered by the release of loss reserves and a surge in dealmaking, although its trading activity saw a sharp slowdown from last year’s record-breaking levels.

The largest U.S. bank said its second-quarter profit rose 155% to $11.9 billion, year-over-year, driven by a credit reserve of $3 billion, released from the funds set aside last year in anticipation of a wave of pandemic-related loan defaults.

JPMorgan’s net quarterly profit came in at $9.6 billion, excluding the reserve release.

“This quarter, we once again benefited from a significant reserve release as the environment continues to improve, but as we have said before, we do not consider these core or recurring profits,” said Chief Executive Officer Jamie Dimon in a release.

However, the revenue from markets and securities services has recorded a drop of 28% to $8.1 billion due to calm financial markets after last year’s unprecedented volatility. Income from securities trading and bond trading fell 30% and 44%, respectively.

The bank’s net interest income dropped 8% - the difference between the bank’s earnings from various sources after paying out on deposits - mainly due to low-interest rates for corporate and investment banking, which saw a slump of 19%, and losses from credit cards.

As for consumer and community banking, average deposits went up by 25%; however, “combined debit and credit card spend was up 45%, or up 22% versus the more normal, pre-pandemic second quarter of 2019,” said Dimon, which is indicating improved spending pattern than last year’s quarter.

“Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve,” Dimon said. “In particular, net charge-offs, down 53%, were better than expected, reflecting the increasingly healthy condition of our customers and clients.”

JPMorgan earned $3.78 per share, in the quarter ended June 30, compared to $1.38 per share a year earlier. However, revenue fell 7% to $31.4 billion.

Analysts, on average, were expecting earnings of $3.21 per share, according to Refinitiv.

The Wall Street behemoth financial institution dropped more than 3% after the result. At the press time, the shares are traded at $154.21.

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