JPMorgan profits rise 25% in second quarter on bumper gain, Wall Street rally

JPMorgan Chase’s (JPM) second-quarter profit jumped on a one-time accounting boost and a Wall Street rally, but another decline in a key revenue source underscored the challenges facing even the largest U.S. bank.

Net income of $18 billion rose 25% from the year-ago period, helped by a share swap in credit card giant Visa (V), which generated a gain of about $8 billion. Excluding the gain, JPMorgan earned $13.1 billion in the quarter.

The investment bank’s results beat analysts’ expectations, with fees from that business rising 50% from a year ago and 17% from the previous quarter to $2.35 billion. M&A revenue jumped to $785 million, its highest level since the third quarter of 2022.

These figures bode well for other large institutions with significant investment banking operations, such as Goldman Sachs (GS) and Morgan Stanley (MS).

But there are also new signs that even JPMorgan is struggling to maintain its stellar performance during a prolonged period of high interest rates, high deposit costs and weak loan demand.

A key measure of loan profit, known as net interest income, fell for the second consecutive sequential quarter, by 1%.

JPMorgan, however, maintained its full-year net interest income forecast of $91 billion, excluding trading revenues. That would represent a 2% increase over last year’s net interest income.

JPMorgan shares fell more than 1% in premarket trading.

JPMorgan CEO Jamie Dimon said that “while market valuations and credit spreads appear to reflect a fairly favorable economic outlook, we continue to be vigilant about potential risks,” referring to geopolitical tensions and persistent inflationary forces.

“Inflation and interest rates could remain higher than the market expects,” he said.

JPMorgan’s results kicked off a new earnings season for the U.S. banking sector, as lenders struggle to prove they remain resilient in the face of uncertainty about the U.S. economy, the path of monetary policy and the unknown outcome of this fall’s presidential election.

Click here for an in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance