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JPMorgan Chase beats expectations for Q2 earnings

Strength in mortgages and real estate cited for growth

Boosted by loan and deposit growth, JPMorgan Chase reported earnings of $1.55 today per share for the second quarter of 2016, $0.12 better than the Capital IQ Consensus of $1.43.

GAAP revenues increased 2.5% from last year to $24.4 billion, also more than the Capital IQ Consensus of $23.84 billion.

"JPMorgan Chase continued to perform well in all of our major businesses,” said Jamie Dimon, JPMorgan Chase chairman and CEO. “We saw strong underlying performance with record consumer deposits, up 10%, credit card sales volume, up 8%, merchant processing volume, up 13% and broad core loan growth, up 16%, particularly in mortgage and commercial real estate.”

“Outside of energy, both wholesale and consumer credit quality remained very good," Dimon said.

Net interest income increased to $11.7 billion, an increase of 6% that was primarily driven by loan growth and the impact of higher rates, but partially offset by lower investment securities balances.

JPMorgan Chase showed an increase in earnings at a time when mortgage rates are near their all-time lows, which means banks are struggling to make a profit.

On July 12, the company even raised its wages for about 18,000 employees to between $12 and $16.50, depending on geographic and market factors.

Average core loans were up 16% from last year, and 3% from last quarter. Consumer and community average core loans were up 23% with record growth in average deposits. Average deposits were up $54 billion, or 10%.

Corporate and investment net income was $2.5 billion, an increase of 6%. Net revenue was $9.2 billion, an increase of 5%.

The report also showed a falling rate of delinquencies on their home loans. 

Click to Enlarge

(Source: JP Morgan Chase)

On the other hand, banking revenue was $2.7 billion, down 10%. Investment banking revenue was $1.5 billion, down 15%, largely driven by lower equity underwriting fees on lower industry issuance. Treasury Services revenue was $892 million, down 1%. Lending revenue was $277 million, down 8%, reflecting mark-to-market losses on hedges of accrual loans.

Commercial net revenue was $1.8 billion, an increase of 4%, reflecting higher net interest income from higher average loan balances and deposit spreads.

“Overall, our performance reflected the strength of our balance sheet and our ability to invest in the future of our company,” Dimon said. “We will continue to be a source of strength for our clients, communities, governments and markets around the world."

3d rendering of a row of luxury townhouses along a street

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