JPMorgan Earnings Get Boost From Interest Rates, Lower Taxes

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JPMorgan Chase & Co. (NYSE: JPM) reported fiscal second-quarter 2018 results before markets opened Friday. The investment bank and financial services giant reported diluted earnings per share (EPS) of $2.29 on managed (adjusted) revenue of $28.39 billion. In the same period a year ago, the big bank reported EPS of $1.82 on revenue of $26.67 billion. The latest results also compare to the consensus estimates for EPS of $2.22 on revenue of $27.36 billion.

Quarterly profits rose by 18%, from $7.03 billion in the second quarter of 2017 to $8.32 billion. Net interest income totaled $13.6 billion, up 9%, driven by the impact of higher rates and loan growth. The bank’s income tax expense fell by $464 million, a decrease of 17%.

Noninterest revenue reached $14.7 billion, up 4%, driven by higher Markets revenue, investment banking fees, and auto lease income. The increase was partially offset by lower Card net interchange income, including a rewards liability adjustment of about $330 million.

Provision for credit losses was $1.2 billion, essentially flat compared to the prior-year quarter.

By divisions, net income in the consumer and community banking group rose by 53% to $3.41 billion, commercial banking net income rose 21% to $1.09 billion and asset management group net income also rose 21% to $755 million for the quarter.

Corporate and investment banking group net income rose 18% to $3.2 billion, and revenues were up 11% to 9.92 billion. Fixed income Market revenues rose 12% to $3.5 billion on “healthy performance across products with good client flows, and improved Commodities revenue compared to a challenging prior year.”

Provision for credit losses in the group totaled $58 million, compared to a benefit of $53 million in the prior-year quarter.

Bank CEO Jamie Dimon said:

We see good global economic growth, particularly in the U.S., where consumer and business sentiment is high. Because of this broad growth and the strong underlying performance across each of our businesses, the company delivered record results this quarter. We also want to acknowledge that global competition is getting stronger.

The bank did not offer guidance in its press release, but the consensus estimates call for third-quarter EPS of $2.26 on revenues of $27.47 billion. The EPS estimate for the 2018 fiscal year is $9.03 on revenues of $110.2 billion.

Shares traded up about 0.6% in Friday’s pre-market to $107.45. The current 52-week range is $88.08 to $119.33. The consensus 12-month price target was $120.83 before results were announced.