JPMorgan Chase beats analysts’ estimates on higher rates, better-than-expected bond trading

JPMorgan Chase reported second-quarter earnings Friday that topped analysts’ expectations, as the company benefited from higher interest rates and better-than-expected bond trading.

Here’s what the company reported:

• Earnings: $4.37 per share adjusted vs. $4 per share Refinitiv estimate
• Revenue: $42.4 billion vs. $38.96 billion estimate

Net income surged 67% to $14.5 billion, or $4.75 per share. When excluding the impact of its First Republic acquisition in early May — a $2.7 billion “bargain purchase gain” from the government-brokered takeover, as well as loan reserve builds and securities losses tied to the purchase — earnings were $4.37 per share.

Revenue rose 34% to $42.4 billion as JPMorgan took advantage of higher rates and solid loan growth. Revenue gains were fueled by a 44% jump in net interest income to $21.9 billion, which topped the StreetAccount estimate by roughly $700 million. Average loans climbed 13%, while deposits fell 6%.

“The U.S. economy continues to be resilient,” CEO Jamie Dimon said in the earnings release. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong.”

Dimon added that there were “salient risks in the immediate view” including dwindling consumer balances, the risk that interest rates would be higher for longer than expected, and geopolitical tension including the Ukraine war.

JPMorgan increased its guidance for 2023 net interest income to $87 billion, which is $3 billion higher than its guidance from May and the bank’s third increase to its NII forecast this year.

Shares of the bank climbed about 2%.

JPMorgan’s retail banking division was its main source of strength this quarter. Profit surged 71% in the…