JPMorgan profits surge 155 per cent
Profits at Wall Street giant JPMorgan Chase & Co surged 155 per cent, driven by the release of loan loss reserves and a fruitful deal making period, the firm announced on Tuesday.
The American bank released around $3bn in loan loss reserves, which were initially built up in anticipation of a rush of Covid-induced defaults, in the second quarter of this year.
Investment banking revenues fell back from recent sharp rises, dipping 19 per cent over the quarter.
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Widespread economic stimulus measures enacted by the US administration designed to protect households’ and businesses’ income has in part helped prevent a wave of expected loan defaults since the onset of Covid.
The reopening of many sections of the US economy has also provided a revenue boost for firms and helped propel households back into jobs. Cheap debt has put borrowers under less strain to maintain repayments.
JPMorgan’s shares dipped 1.5 per cent as overall corporate and investment banking revenues declined 19 per cent, mainly due to a slump in bond trading as a result of traders fleeing safe haven assets due to fears over inflation mounting.
Jamie Dimon, chairman and CEO of JPMorgan Chase & Co, says: “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 profit.”
Net income over the quarter was $11.9bn, while earnings per share, a key measure of a share’s profitability, was $3.78 in the second quarter. This is up sharply from $4.7bn and £1.38 respectively in the same period last year.
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Dimon sought to temper positivity about the results by highlighting that the firm does not consider the release of loan loss reserves as recurring profits.
“Our earnings, not including the reserve release, were $9.6bn” he said.