JPMorgan reports Q2 2014 earnings, which declined by 8% as America’s largest bank (along with most others in the industry) struggles with falling incomes from trading and weak mortgage lending.
JPMorgan posted profits of $6 billion or $1.46 per share, and revenues of $25.3 billion, compared to profits of $6.5 billion and $1.65 per share in Q2 2013. Wall Street had expected revenues to be approximately $23.8 billion with $1.29 per share.
Profit from investment banking fell 31% to $2 billion compared to Q2 2013. Fixed-income trading revenue declined by 15% to $3.5 billion.
JPMorgan described Q2 as a period of historically low levels of volatility and sluggish client activity across products.
Equity markets revenue also fell, by 10%, to $1.2 billion compared to Q2 2013.
JPMorgan’s Chairman and CEO, Jamie Dimon, said regarding the financial results:
“Despite continued industry-wide headwinds in Markets and Mortgage, the firm has continued to deliver strong underlying performance. Consumer & Community Banking deposit growth and card sales volume both outpaced the industry2, and we had record loan originations in Business Banking.”
“The Corporate & Investment Bank saw strong performance in fees with #1 position in Global IB fees YTD, global debt and equity, global syndicated loans and global long-term debt. Commercial Banking clients generated record investment banking revenues in the first half of the year. Asset Management had excellent performance across all measures.”
Some improvements were detected toward the end of Q2 2014 in wholesale utilization, commercial and banking segments, as well as markets activity. However, it is too early to know whether this momentum will continue, Mr. Dimon commented.
The bank raised more than $1 trillion in capital for its clients during the first six months of this year, “which included $10 billion for US small businesses,” Mr. Dimon added.
Other banks facing similar problems
Usually, JPMorgan’s financial results function as a bellwether for the rest of the industry. This time, Wells Fargo was the first to publish Q2 results, which posted a net income rise but a revenue decline, partly due to weaker mortgaging refinancing business.
Citigroup also reported its Q2 results this week, which came in with falling revenues and net income. America’s third largest bank agreed to a $7 billion settlement with the Justice Department following probes into its activities related to the issuance and sale of residential mortgage-backed securities.
Reported earnings so far by three major US banks point to a shift on Wall Street, where persistently low interest rates and stricter regulations following the financial crisis have severely dampened trading activity.
(Data source: JPMorgan)
JPMorgan chief’s health
This is the first earnings announcement by JPMorgan since its CEO and Chairman, Jamie Dimon, 58, announced that he would be undergoing treatment for throat cancer.
Mr. Dimon, a lifetime non-smoker, told his employees and shareholders at the beginning of this month that his disease is curable and he will continue as head of the company.
Within 24 hours of his announcement, JPMorgan’s share price dropped 1% on a day when the rest of the stock market recorded strong gains.