JPMorgan Q2 profit rose 25% as bank cashed in holdings in Visa
Signs of consumers slowing down spending and falling behind on their bills weighed down shares of the big banks on Friday
NEW YORK — Signs of consumers slowing down their spending and falling behind on their bills weighed down shares of the big banks on Friday. JPMorgan Chase and Wells Fargo saw their adjusted profits fall, while Citigroup saw sluggish spending on its credit cards.
The major banks have benefitted from higher interest rates for the last two years, but those rates are causing consumers and businesses to slow down spending due to higher financing costs.
JPMorgan set aside $3.1 billion to cover potentially bad loans, up sharply from a year earlier, as the bank acknowledged that delinquencies were climbing among some Americans. Meanwhile Citigroup had to set aside more for potential losses as well.
“Higher-for-longer interest rates, persistently high housing prices, softening used vehicle values, and signs of a cooling labor market merit focused scrutiny from the banking sector,” wrote Chris Stanley, the banking industry practice lead at Moody’s, in a note to investors.
JPMorgan’s headline profits jumped sharply in the second quarter as the bank cashed in billions of dollars of its holdings in Visa Inc.
The nation’s biggest bank by assets on Friday posted a profit of $18.15 billion, up 25% from a year earlier. On a per share basis, JPMorgan earned $6.12 per share, which beat analysts’ estimates.
A significant contributor to JPMorgan’s results was a $7.9 billion gain on its stake in Visa. The bank converted its ownership in the payment processing giant into common stock in the second quarter. The bank also donated $1 billion of Visa shares to JPMorgan’s philanthropic organization.
Without the gain,
Read more on abcnews.go.com
