US banking giant posts 31pc rise in second-quarter earnings
US banking giant JP Morgan Chase posted a 31pc increase in second-quarter earnings yesterday after income from underwriting jumped and bond market trading revenue rose.
The biggest bank in the US racked up gains even though the US debt markets plunged during the quarter, lifting longer-term home-loan rates and cutting into mortgage lending revenue. The bank said difficult market conditions might force it to accelerate cost-cutting moves.
The bank's results beat analysts' expectations, and the lender said it managed to make more profit from corporate bonds and related derivatives even amid the market turmoil.
Shares were up nearly 1pc before the markets opened on the news.
Earnings in the same period last year had been hurt by "London Whale" trades – bad bets on the credit market that ultimately cost the bank more than $6bn (€4.59bn).
This year overall, net income in the three months to the end of June rose to $6.5bn, or $1.60 per share, from $4.96bn, or $1.21 per share, a year earlier.
Analysts were expecting earnings of $1.44 per share, according to Thomson Reuters.
The bank said revenue from fixed income, or bonds, and equities rose 18pc.
Mortgage banking income, which comes from making home loans and servicing existing mortgages, fell 14pc to $1.1bn as a refinancing wave subsided and interest rates rose in the US.
JP Morgan is the second-largest US mortgage lender after Wells Fargo, with an 11pc share of the market.
JP Morgan shares have increased 25pc since the start of the year.
However, the stock has been volatile in recent weeks because of concern that higher bond yields would erode the value of bank assets before they generate new revenue from lending. (Reuters)