JPMorgan earnings soar on dealmaking income and $3bn reserve release

JPMorgan Chase’s second-quarter profit more than doubled as the release of billions of dollars set aside to cover potential loan losses, together with fees from advising on deals, offset a slowdown in trading activity and a lack of demand for loans.

The largest US bank reported a profit of $11.9bn, or $3.78 per share, up from $4.7bn, or $1.38 per share in the same period last year. Analysts had forecast earnings of $3.13 per share, according to a consensus data compiled by Bloomberg.

Revenue of $31.4bn beat analysts’ forecasts for $30bn but was down from $33.8bn a year earlier.

Profits were flattered by the release of $3bn that had been set aside to cover potential losses triggered by the economic fallout from the Covid-19 pandemic, which have not materialised.

Ahead of the earnings statement, one of the central questions for JPMorgan was the bank’s outlook for loan growth and net interest income, which measures the difference between what banks pay on deposits and what they earn on loans and other assets. Both metrics have been weighed down by government stimulus and a flattening yield curve.

Loans at JPMorgan’s consumer and community banking division were down 3 per cent on the back of higher prepayments in mortgages and lower balances at its credit card business, said chief executive Jamie Dimon.

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