JPMorgan notches record $41 billion in revenue on interest rates, purchase of First Republic
JPMorgan Chase & Co.’s revenue soared to a record in the second quarter, boosted by the Federal Reserve’s interest-rate hikes and its acquisition of First Republic Bank.
The firm’s US$41.3 billion in revenue beat analysts’ expectations, fuelled by US$21.8 billion in net interest income as well as a $2.7 billion gain on its First Republic purchase, according to a statement on July 14.
JPMorgan agreed in May to acquire First Republic, beating out rivals in a government-led auction. First Republic was the fourth regional lender to collapse in a matter of weeks, and its failure was the second-largest in U.S. history. The deal made the biggest U.S. bank even bigger.
Shares of JPMorgan rose in early New York trading after the New York-based company raised its full-year guidance for net interest income. The bank now expects US$87 billion, excluding its trading business, up from the US$84 billion it predicted at its investor day in May.
“The U.S. economy continues to be resilient,” chief executive officer Jamie Dimon said in the statement. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labour markets have softened somewhat, but job growth remains strong.”
Results included a US$1.2 billion reserve build related to First Republic. Overall, the provision for credit losses was US$2.9 billion, with a net reserve build of US$1.5 billion and US$1.4 billion of net charge-offs.
Trading and investment banking, while both down from a year earlier, came in ahead of analyst expectations, driven by beats in fixed-income trading and equity and debt underwriting.
Dimon said in the statement that JPMorgan expects “material capital changes with the finalization of Basel III and probable changes
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