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JPMorgan has reported a significant increase in profit, benefiting from a long-anticipated recovery in dealmaking. The Wall Street giant announced a net income of $18.1 billion for the second quarter, marking a 25 per cent rise compared to the same period last year and surpassing analysts’ expectations.
The bank’s revenue saw a 22 per cent increase, driven by a rebound in mergers and acquisitions (M&A) activity and a modest uptick in net interest income, which is the difference between what banks pay out and receive in interest payments. Additionally, the figures were boosted by a $7.9 billion net gain from the sale of shares in the payments giant Visa.
Investment banking fees surged by 50 per cent from last year, exceeding the bank’s guidance despite a low base comparison. Equity trading also outperformed expectations, with the division recording a 21 per cent revenue increase.
Dealmaking has been sluggish over the past couple of years due to high interest rates and economic uncertainty. However, the prospect of interest rate cuts and a likely soft landing for the economy has contributed to a recovery that is expected to gain momentum as the year progresses. According to PwC, the total value of US deals in the first five months of 2024 was $535 billion, up nearly 30 per cent from the same period last year.
JPMorgan also increased its provision for credit losses by five per cent from last year to just over $3 billion, largely due to funds set aside for credit card loans. Jamie Dimon, the bank’s long-time CEO, highlighted the importance of remaining vigilant about potential tail risks, citing a complex and potentially dangerous geopolitical situation.
Wells Fargo and Citi also released their second-quarter results, with Goldman Sachs and Morgan Stanley expected to update investors next week. Wells Fargo reported better-than-expected earnings and revenue but saw its stock decline in premarket trading. Despite disappointing net interest income, Citigroup shares rose after its earnings beat expectations. A full report of these figures has been reported by Barrons.
Citigroup announced plans to repurchase $1 billion of stock during the third quarter, following a recent increase in its dividend. However, Wells Fargo’s stock fell as investors reacted to an update on the bank’s net interest income outlook, making it the worst performer in the S&P 500 on Friday.
