JPMorgan Chase, the largest U.S. lender, posted greater profit than expected in the three months through June as market volatility buoyed trading revenue and borrowers paid higher interest rates for loans.
Profit of $2.29 a share at the New York-based firm compared with an average estimate of $2.22 from analysts surveyed by FactSet. Net income climbed 18 percent to $8.32 billion on revenue of $28.4 billion, reflecting a vibrant U.S. economy buoyed by last year’s tax cuts and the resulting growth in corporate investment.
“Consumer confidence and business confidence are high, albeit off their highs,” probably because of concerns that wide-ranging tariffs imposed by the Trump administration will hurt growth, Chief Executive Officer Jamie Dimon said on an earnings call. “People are going back to the workforce. The consumer balance sheet is in good shape. Capital expenditures are going up.”
Stock-trading revenue alone climbed 24 percent to $1.96 billion at JPMorgan, outpacing a projection of 6 percent from Susan Roth Katzke of Credit Suisse, as investors shelled out fees to reposition their holdings amid global market fluctuations spurred by increasingly protectionist U.S. trade policies.
Along with tariffs on $34 billion in Chinese goods so far and the threat of at least $416 billion more, the White House has imposed double-digit duties on metals and threatened levies of 25 percent on automotive imports. Corporate executives have joined economists and even lawmakers from President Trump’s own party in warning that the U.S. is risking a trade war that undermines the economy and potentially tips the world into recession.
“There are issues, particularly with China, around trade,” Dimon told reporters on Friday, but “there’s a strong preference to work with allies to resolve it as opposed to tariffs.”
Dimon, who also chairs the Business Roundtable, an organization representing 200 of the largest U.S. companies, has cautioned that a trade war could erase the economic benefits of a GOP-led tax overhaul that cut the top corporate rate to 21 percent from 35 percent and turned on a spigot of business spending for wages and factories.
JPMorgan continued to benefit from that reduction in the three months through June, with its effective tax rate falling 7 percentage points to 21 percent.
Earnings in its large community banking division surged 53 percent to $3.41 billion as interest income climbed amid rate increases from the Federal Reserve. Profitability improved in the credit card business, and the volume of auto leases increased.
The bank’s performance prompted Ken Leon, an analyst with CFRA Research who noted solid loan growth, to bump his full-year earnings estimate up to $9.05 a share.
“We continue to see core trends as good,” added UBS analyst Saul Martinez, who along with Jason Goldberg of Barclays pointed to higher-than-expected fees from stock and bond trading.
The largest U.S. lender, JPMorgan works with roughly half of U.S. households and plans to open roughly 400 new branches in as many as 20 new markets including Washington, D.C., over the next five years.
The company’s shares dipped 0.2 percent to $107.06 in New York trading early Friday.
