JP Morgan bags record profit – but Dimon warns of risks shifting ‘below the surface’
JP Morgan secured the highest quarterly profit in US banking history in its second quarter but chief executive Jamie Dimon tempered the celebration with a warning that risks in the global economy were “shifting below the surface like tectonic plates”.
The Wall Street giant recorded a 41 per cent jump in net income to $21.2bn (£15.8bn). This included a $4.6bn one-off boost from Visa shares held in its corporate division that were unlocked when the payments giant allowed the bank to swap its holdings for more flexible, market-rate stock.
Revenue was pushed higher by a blowout quarter quarter for the bank’s trading division. Revenue in the trading business was up 35 per cent to $12.1bn, with an 86 per cent increase at its equities business.
Trading desks have benefited from market volatility throughout the first half of the year after numerous sell-offs hit global stock exchanges following the outbreak of war in the Middle East.
JP Morgan’s total revenue breezed ahead of market expectations at just north of $58bn, far above the $50.2bn pencilled in by analysts surveyed by LSEG.
Dimon said performance was “strong across the firm” as revenue in each line of business hit a new record.
“These results were the product of a particularly favourable environment with an elevated level of market activity, as well as rigorous execution, years of consistent investment and thoughtful capital deployment,” Dimon said.
Investment banking surged 46 per cent to $9.7bn as revenue from fees hit their highest level since 2021. Market revenue was up 35 per cent to $12.1bn.
Goldman Sachs also posted a surge in its equities trading division on Tuesday, rising 72 per cent to $7.42bn – around $2.3bn higher than market expectations.
Wealth was also a standout performer with net income rising 33 per cent to $2bn as assets under management surpassed the $5tn mark.
Dimon: We cannot predict how risks will play out
But Dimon – who is regarded as one of the most influential figures in finance – accompanied the booming profit with a warning over the uncertainties facing the global economy.
“Several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices,” the banking chief said.
“We cannot predict how these forces will ultimately play out.”
Dimon has remained a vocal critic over the soaring value of AI equities, previously warning his “anxiety is higher over it” and that people were getting “too comfortable that this is real”.
The American banker said on Tuesday risks “remain manageable” but warned they could also cause “meaningful disruptions when they shift or collide”.
The warnings echo the sentiment of numerous finance figures and policymakers across the globe, who have the sounded alarm on the coinciding threats caused by the US-Iran war and an ‘AI bubble’.
In a session with the Treasury Committee on Tuesday, Bank of England governor said risks have “unequivocally” risen since the start of the year, with specific concerns around vulnerabilities overlapping.
The Bank’s Financial Policy Committee said earlier this month the likelihood of these risks occurring at the same time had “increased…potentially amplifying their combined impacts on financial stability”.