JP Morgan results beat Wall Street expectations
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Friday 12 July 2013
JP Morgan Chase, the American bank that this time last year was nursing heavy losses from botched derivatives trades, surpassed expectations with its results for the second quarter of this year, reporting a 31 per cent rise in profits as its investment banking business strengthened and it set aside less money to cover bad loans.
The lender's net income climbed to $6.5bn in the three month period to June. That compares to just under $5bn in the same period year ago, when it was hit by the bulk of the around $6bn in losses from botched 'London Whale' trades.
The result was better than what had been expected by Wall Street analysts. It came as the bank headed by chief executive Jamie Dimon said it had put aside less money to cover bad loans. Provision for credit losses declined to $47m, down from over $200m last year, as revenues from its fixed income trading arm climbed 19 per cent.
Loan growth was a weak spot, in keeping with industry trends. Mortgage originations were lower compared to the previous quarter, and net interest income also ticked slightly lower.
Mr Dimon, who earlier this year emerged triumphant after a shareholder proposal calling for him to be stripped of his dual role as chairman was defeated at the bank's annual meeting, acknowledged the weakness, saying: "Loan growth across the industry continued to be soft, reflecting a cautious stance by consumers, many small businesses and corporations."
Nonetheless, he remained positive on the US economy, where the policy conversation in recent months has focused on how and when the Federal Reserve might begin to roll back its extraordinary stimulus measures. "We continue to see broad-based signs that the U.S. economy is improving and we are hopeful that, as jobs are added and confidence builds, the U.S. economy will strengthen over time," he said.
Wells Fargo, meanwhile, posted higher profits as it kept a check on its expenses. Second quarter profits were up 19 per cent as it also set aside less money to cover bad loans, with its provisions falling by more than 60 per cent to $652m.
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