J.P. Morgan, run by Chairman and Chief Executive James Dimon, kicks off second-quarter earnings season for large US banks, offering investors a snapshot of a quarter that analysts expect will be characterized by Brexit's surprise on the back end.
JPMorgan Chase also increased its loan loss provisions, setting aside $1.4 billion in the second quarter compared to $935 million in the same period past year.
However, its earnings per share of $1.55 handsomely beat the average analyst estimate of $1.43 per share, according to Thomson Reuters I/B/E/S. Analysts have reduced their forecasts for big banks in recent weeks.
JPMorgan's stock rose 2.8 percent in pre-market trading Thursday.
JPMorgan's total non-interest expenses fell 5.9 per cent to US$13.64 billion in the quarter, while total provisions for bad loans jumped 50 per cent to US$1.4 billion.
She added Brexit will take time to unfold and it is too early to know for sure what will happen with the bank's employee base in the United Kingdom, though J.P. Morgan would prefer to keep its European headquarters in London.
Net income dropped to $6.2 billion, or $1.55 a share, from $6.29 billion, or $1.54, a year earlier, the company said Thursday in a statement.
Revenue for the second quarter rose 2.8% to $25.2 billion, which beat the Bloomberg estimate of $24.5 billion. The group saw profits fall 12 percent on a year-over-year basis in the first quarter.
The bank's revenue from trading was also up, growing by 23% compared to the second quarter of 2015.
Net income at JP Morgan Chase has slumped slightly year-on-year, the banking giant reported today as U.S. banking earnings season got off to a start. Before the historic referendum, Dimon was an outspoken critic of Brexit, warning it could force JPMorgan to cut some of its 16,000 jobs in the country.
Net revenues from Consumer & community banking or CCB segment grew 4 percent to $11.5 billion, and Corporate & investment bank or CIB rose 5 percent to $9.2 billion.
Ms. Lake said while it is early into the third quarter, trading has been "fine" and client activity levels are "returning to normal".
While JPMorgan executives have said trading rebounded in April and May, that was before the referendum roiled markets and pushed out expectations for additional USA interest-rate increases to at least next year.
It was just what bank investors needed to hear after a punishing month of Brexit fears and a further delay to any US rate hike.
Investors are keeping an eye on the earnings of US banks to see if the companies were impacted by the instability in the European Union and Britain following the Brexit.
Longer-term, low interest rates pose a risk to bank profits.
Dimon received a $27 million dollar compensation package in 2015, up 35 percent from the previous year, while the low-tier workers in question working full-time earned roughly $21,112. Management has said it should be about 15 percent, but to get there, the bank needs higher interest rates.
Traders say if economic data continues to point to momentum in the economy, the Federal Reserve could raise rates later in the year. While the CEO underwent throat cancer treatments two years ago, he hasn't undergone any recently, the person said. Investors are closely watching USA bank earnings to see if their performance in the second quarter avoided pain from turbulence in the European Union and other factors that have hampered Wall Street banks in 2016. It also called into question how much money and time U.S. banks will have to spend to move from London their operations serving European customers.