BIG BANKS BOOM
JPM, G’man soar
Two Wall Street giants said quarterly earnings surged past analysts’ expectations as dealmaking stays hot and the economy continues its roaring recovery.
JPMorgan Chase said Tuesday it more than doubled its second-quarter profit as the US economy bounced back from the pandemic and the mega-bank continued to release reserves it had set aside for possible loan defaults.
Meanwhile, Goldman Sachs reported $5.49 billion in profit on $15.39 billion in revenue — far more than the $12.17 billion in revenue bank analysts had expected. Earnings per share were $15.02 compared to an estimated $10.25 per share, according to FactSet.
Goldman’s investment banking group led the bank’s growth — bringing in $3.61 billion in fees as more companies are going public, looking at possible mergers and acquisitions and raising capital. It was the second-best quarter ever for the investment bank — just lagging the first quarter of 2021.
Meanwhile, at JPMorgan, the nation’s biggest bank, profits were $11.95 billion or $3.68 a share — beating analysts’ expectations of $3.20 a share and more than doubling profits from a year earlier, when the bank reported $4.69 billion or $1.38 a share.
The profit jump stems partly from the fact JPMorgan is benefiting from the billions it set aside last year to prepare for potential loan defaults by businesses struggling during the pandemic. The bank posted a one-time gain of $2.3 billion from a release of $3 billion in loans.
“This quarter we once again benefited from a significant reserve release as the environment continues to improve,” JPMorgan CEO and Chairman Jamie Dimon (inset) said in a statement. But even as profit surged, JPMorgan’s revenue cratered 8 percent — dropping from $33.08 billion last year to $30.48 billion this quarter. The pandemic-related market volatility of 2020 — which boosted JPMorgan’s trading business — has slowed while lending margins have shrunk.
Goldman’s numbers look far better compared to the second quarter of 2020, when the bank was plagued with fallout from the 1MDB Malaysian bribery scandal and was forced to shell out $2 billion to the Malaysian government. Investment banking revenue is up 36 percent compared to the same quarter last year when the 1MDB fine trounced the bank’s bottom line.
Goldman stock has surged more than 40 percent since the beginning of the year and shareholders also are likely celebrating the announcement last month Goldman will increase the dividend to $2 a share from $1.25 a share.