JPMorgan Chase tops second-quarter revenue expectations on strong investment banking

JPMorgan Chase on Friday posted second-quarter profit and revenue that topped analysts' expectations as investment banking fees surged 52% from a year earlier.

Here's what the company reported:

The bank said earnings jumped 25% from the year-earlier period to $18.15 billion, or $6.12 per share. Excluding items related to the bank's stake in Visa, profit was $4.26 per share.

Revenue rose 20% to $50.99 billion, topping the consensus estimate of analysts surveyed by LSEG, helped by better-than-expected investment banking fees and equities trading results.

CEO Jamie Dimon noted in the release that his firm was wary of potential future risks, including higher-than-expected inflation and interest rates, even while stock and bond valuations currently "reflect a rather benign economic outlook."

"The geopolitical situation remains complex and potentially the most dangerous since World War II — though its outcome and effect on the global economy remain unknown," Dimon said. "There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world."

A rebound in Wall Street activity, especially on the advisory side, was expected to aid banks this quarter, and JPMorgan's results bear that out.

JPMorgan reaped $2.3 billion in investment banking fees, exceeding the StreetAccount estimate by roughly $300 million.

Equities trading revenue jumped 21% to $3 billion, topping the estimate by $230 million, on strong derivatives results. Fixed income trading jumped 5% to $4.8 billion, matching the estimate.

But the bank had a $3.05 billion provision for credit losses in the quarter, exceeding the $2.78 billion estimate, which indicated that it expects more borrowers will default in the future. A rise in charge-offs and moves to build loan loss reserves in the quarter was driven by the firm's massive credit-card business, the bank said.

"JPMorgan has navigated a challenging interest rate environment very well," said Octavio Marenzi, CEO of consulting firm Opimas.

Still, while banking and equities trading boosted results, "We see Main Street banking beginning to sputter," Marenzi said. "Provisions for credit losses were up significantly, showing us that JPMorgan is expecting to see a rough patch in the US economy."

Shares of JPMorgan slipped 2% in morning trading.

Still, JPMorgan CFO Jeremy Barnum told reporters Friday during a call that overall he saw "quite a healthy consumer" despite some weakness in the lower-income segment. About half of the increase in card reserves was tied to rising balances, he noted.

"The overall picture on charge-offs is consistent with the story of normalization rather than deterioration at this point," Barnum said. " Yes, the economy is slowing, but it seems to be on trend for very much of a soft landing."

Wells Fargo and Citigroup also posted earnings Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.

This story is developing. Please check back for updates.