JPMorgan Posts Strong Second Quarter Results
JPMorgan Chase & Co.’s (NYSE: JPM – $68.73) second-quarter profit increased 5.2% as the firm slashed costs and benefited from strong deal-making activity that helped offset weaker trading revenue. The largest U.S. bank by assets reported a profit of $6.29 billion, or $1.54 a share vs. $5.98 billion, or $1.46 a share in the same period of 2014. Analysts had expected earnings of $1.44. Revenue fell 3.2% to $24.53 billion, slightly ahead of analysts’ expectations of $24.49 billion. After a strong first quarter, volatile and seasonal trading revenue decreased 8.9% to $4.51 billion from $4.95 billion in the second quarter of 2014. Another big driver of bank earnings in recent years, legal costs, fell sharply for JPMorgan in the second quarter with legal fees down 57% from the $669 million in the same period a year ago. In its lending business, Chase extended $29.3 billion in mortgages in the quarter, an increase of 74% vs. 2014. Profits in its mortgage division, the second largest in the U.S. by volume, were $584 million, down 20% from the second quarter of last year. JPMorgan also intends to reduce expenses in its Consumer and Corporate & Investment Bank by a combined $4.8 billion by 2017. Shares in JPM hit an all-time high of $69.75 during the quarter and have risen about 9% since the start the year, a better performance than the 4.6% increase in the KBW index of bank stocks over the same period. The shares have worthwhile 3- to 5-year total return potential, enhanced by a healthy dividend which was increased to $0.44 per share or $1.76 annually yielding 2.62%, at current levels.