JPMorgan Q2 Profit Down 28%; Results Miss Estimates

US investment bank JPMorgan Chase & Co. (JPM) reported Thursday a profit for the second quarter that declined 28 percent from last year, hurt primarily by higher noninterest expense and a hefty net credit reserve build. Both earnings per share and revenues for the quarter missed analysts’ expectations.

“JPMorgan Chase performed well in the second quarter as we earned $8.6 billion in net income on revenue of $30.7 billion and an ROTCE of 17%, with growth across the lines of business, while maintaining credit discipline and a fortress balance sheet,” said Jamie Dimon, Chairman and CEO.

Net income for the quarter declined to $8.65 billion or $2.76 per share from $11.95 billion or $3.78 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $2.91 per share for the quarter. Analysts’ estimates typically exclude special items.

The provision for credit losses was a net benefit of $1.10 billion, , including $657 million of net charge-offs and a net reserve build of $428 million, primarily reflecting loan growth as well as a modest deterioration in the economic outlook, compared to last year’s net benefit of $2.29 billion.

Total net revenue on a reported basis edged up 1 percent to $30.72 billion from last year. On a managed basis, net revenue was $31.63 billion, up 1 percent from $31.40 billion in the previous year. The Street expected revenues of $31.95 billion for the quarter.

Net interest income was $15.2 billion, up 19 percent, driven by higher rates and balance sheet growth.

Non-interest revenue was $16.4 billion, down 12 percent from last year, largely driven by lower Investment Banking fees and lower Card income in CCB, partially offset by higher CIB Markets revenue.

Noninterest expense was $18.75 billion, up 6 percent, driven by continued investments in the business, including technology and marketing, and higher structural expense, primarily compensation, partially offset by lower revenue-related compensation.

Consumer & Business Banking net revenue was $6.56 billion, up 9 percent, predominantly driven by growth in deposits.

Banking revenue declined 37 percent to $3.22 billion, while markets & securities services revenue grew 8 percent to $8.72 billion from last year.

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