JPMorgan Chase’s profit in the second quarter more than doubled because it released billions of dollars in reserves to cover potential loan losses, and transaction consulting fees offset the slowdown in trading activity and insufficient loan demand.
The largest bank in the United States reported a profit of US$11.9 billion, or US$3.78 per share, up from US$4.7 billion in the same period last year, or US$1.38 per share. According to consensus data compiled by Bloomberg, analysts had expected earnings per share of $3.13.
The $31.4 billion in revenue exceeded analysts’ expectations of $30 billion, but was lower than the $33.8 billion in the same period last year.
The release of $3 billion set aside to compensate for the potential losses caused by the economic impact of the Covid-19 pandemic has flattered profits, but these losses have not yet been realized.
Prior to the release of the income statement, one of JPMorgan’s core issues was the bank’s outlook for loan growth and net interest income, which measures the difference between the deposits paid by banks and the income they receive from loans and other assets. Both of these indicators have been dragged down by government stimulus measures and a flattening yield curve.
Chief Executive Jamie Dimon (Jamie Dimon) said that due to the increase in mortgage advances and the reduction in credit card business balances, loans to the consumer and community banking divisions of JPMorgan Chase fell by 3%.