JPMorgan Chase's second-quarter profit falls short of expectations due to an increase in credit loss provisions

The second-quarter financial results of JPMorgan Chase (NYSE: JPM), the largest bank in the United States, fell below Wall Street consensus because provisions were accumulated in preparation for potential credit losses. Investment banking fees have recovered, and market earnings have improved.

JPM shares fell 0.9% in pre-market trading on Friday.

The company set the full-year net interest income guidance announced in May to 91 billion dollars, compared to Visible Alpha's consensus of 91 billion dollars.

Guidance on adjusted expenses was also unchanged at 92 billion dollars. The net amortization rate for card services is expected to be ~ 3.4%.

Non-GAAP EPS for the second quarter was $4.40, below the analysts' average forecast of $4.51.

Adjusted sales were 51 billion dollars, compared to 42.5 billion dollars in the previous fiscal year and 42.4 billion dollars in the same period last year.

“This quarter, CIB (Commercial & Investment Bank) saw a 50% increase in investment banking fees at a low level, and overall product market share improved to 9.5% compared to the same period last year. “The market segment's revenue also increased by 10%. At CCB, the net increase in current accounts exceeded 0.45 million accounts, and the net increase in accounts was updated for 50 consecutive quarters.

The amount of debt loss provision was 3.05 billion dollars, which exceeded the Visible Alpha consensus (2.8 billion dollars).

Net interest income was 22.7 billion dollars, down from 23.1 billion dollars in the previous quarter compared to Visible Alpha's forecast of 22.8 billion dollars, and increased from 21.8 billion dollars in the same period last year.

The total loan amount of JPMorgan Chase (JPM) as of 2024/6/30 is 1.32 billion dollars compared to 1.31 billion dollars as of 3/31. Deposit balances were 2.4 billion dollars, down from 2.43 billion dollars at the end of the first quarter.

Non-interest expenses for the second quarter were 23.7 billion dollars, up from 22.8 billion dollars in the first quarter and 20.8 billion dollars in the second quarter of 2023.

Second quarter gross operating margin and net profit by segment

The gross operating margin of the Consumer & Community Banking Division was 17.7 billion dollars, flat from the previous quarter, up 3% from the same period last year, and net profit was 4.2 billion 10 million dollars, down 13% from the previous quarter and 21% from the same period last year. The amount of debt loss provision was 2.6 billion dollars, up 38% from the previous quarter and 42% from the same period last year. The net increase in reserves is mainly in the card service business, mainly due to growth in loans and updates to specific macroeconomic variables.

The gross operating margin of commercial banks and investment banks was 17.9 billion dollars, up 2% from the previous quarter and 9% from the same period last year. The gross operating margin of market & securities services was 8.9 billion 70 million dollars, down 2% from the previous quarter and up 8% from the same period last year. Revenue from market operations was 7.8 billion dollars, up 10% from the same period last year. Earnings in the bond market were mainly driven by securitized products, and rose 21% to 4.8 billion dollars. Stock market earnings increased 21% to 3 billion dollars.

Revenue from the Asset & Wealth Management Division was up 3% from the previous quarter, 5.2 billion 50 million dollars, up 6% from the same period last year, and net profit decreased 2% from the previous quarter and 1.2 billion 60 million dollars, down 3% from the same period last year.

The conference call is at 8:30 a.m. EST.

Prior to this, JPMorgan Chase's non-GAAP EPS fell short of 0.11 dollars at 4.40 dollars, and sales fell short of 4.54 billion dollars at 50.2 billion dollars.