JPMorgan kicked off big bank earnings with (surprise!) a beat.
Adjusted revenue of $31.4 billion topped estimates. The market was looking for $30.1 billion. The range was $29 billion to $31.35 billion.
EPS of $3.78 also topped estimates. Consensus wanted $3.15. Net income was $11.9 billion.
Obviously, this was aided by another quarter of “significant” (Jamie Dimon’s word) reserve releases. Firmwide, the Q2 release was $3 billion (figure below). “The environment continues to improve, but as we have said before, we do not consider [reserve releases] core or recurring profits,” Dimon said Tuesday. Not including the reserve release, earnings were $9.6 billion.
Everyone knows the benefits from reserve releases are temporary, so nobody should be disappointed when management reiterates the point. The fact they’re materializing is evidence that the worst case scenario from the pandemic didn’t unfold. Still, there’s a sense in which they make already opaque bank earnings even more difficult to parse.
In any event, FICC was a slight miss, which may disappoint at the margins. Revenue there was $4.1 billion, down 44% YoY. (The comp was obviously daunting.) The market wanted $4.12 billion. Equities revenue of $2.7 billion was up 13%. Overall, markets and securities services revenue was $8.1 billion (figure below).
Do note that although markets revenue was down 30% compared to what it’s probably fair to describe as an anomalous quarter last year, it was up around 25% compared to 2019.
Net interest income looked like a miss. For the full year, the bank sees NII at $52.5 billion, “market dependent.”
IB was strong. Revenue of $3.4 billion was up YoY. Fees rose 25% and were higher across the board. Dimon was pleased with that. “Global IB fees are at an all-time high,” he boasted. M&A is alive and well.
Additionally, it’s worth noting that combined debit and credit card spend was up more than 22% compared to what the bank described as “the more normal, pre-pandemic second quarter of 2019.” JPMorgan saw growth increase “across categories including in travel and entertainment, which returned to growth in June, up 13%” compared to two years ago. Originations in home lending soared 64%.
All in all, these results are fine, but I doubt the market is going to be “impressed,” per se. You’ll probably see the word “mixed” bandied about. Dimon prefers “solid.”
