Jamie Dimon, CEO of JPMorgan Chase & Co.
Giulia Marchi | Bloomberg | fake pictures
JPMorgan Chase reported second quarter earnings.
Here’s how JPMorgan did it:
Earnings: $ 1.38 per share, compared to the estimate of $ 1.04 per share by analysts surveyed by Refinitiv.
Revenue: $ 33 billion, compared to the estimate of $ 30.3 billion.
JPMorgan, the largest bank in the United States by assets, is also the first major lender to report earnings. The company will be closely watched for clues on how the coronavirus pandemic is affecting banks’ institutional and retail businesses.
The key question investors have is whether the second quarter will represent the lowest point for bank profits this year: Big banks are expected to show the highest provision for credit losses in any quarter since the financial crisis due to the pandemic, according to Barclays analyst Jason Goldberg.
The fate of the industry is closely related to the coronavirus pathway because unemployment caused by states closing their economies affects clients’ ability to pay debts.
JPMorgan CEO Jamie Dimon said in May that the odds were “pretty good” that the economy will recover in the second half of the year, fueled by the reopening. But that scenario could be threatened by the recent progression of the coronavirus, which has already forced some states to reverse course and close business again.
A bright spot for the industry has been trading, which has benefited from rising volatility and unprecedented Federal Reserve actions to shore up credit markets. At JPMorgan, the bank’s business division was aiming for more than a 50% revenue increase compared to the previous year, co-chairman Daniel Pinto said in late May.
While bank stocks have rebounded from their March lows, they have underperformed the broader indices, which have been driven by the tech sector.
One factor keeping bank stocks low: Low interest rates have pressured net interest margin, a key measure of profitability in the banking sector. Industry loan books have also started to shrink, in part due to less use of credit cards and fear of increased defaults.
This story is unfolding. Please check for updates.
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