Jpmorgan beats estimates on trading, but loan losses loom

Jpmorgan Chase & Co’s results were one more marker of the disconnect between ebullient markets and concern about the US economy.

The biggest US bank said second-quarter profit fell 51 per cent to $4.69 billion, a smaller drop than forecast, as record trading revenue helped counter the biggest loan-loss provision in the firm’s history. It’s the second consecutive quarter that trading set a record, as the bank’s Wall Street unit is helping prop up a consumerlending division struggling with business closures and swelling unemployment rolls.

The firm’s fixed-income trading revenue doubled from a year earlier and the equity-markets unit surged more than 30 per cent as trading desks benefited from a rollercoaster year. After the pandemic drove stocks into the fastest bear market ever in March, the S&P 500 mounted one of the biggest rallies in nine decades, boosted by stimulus measures and optimism over a swift economic rebound.

Fixed-income traders generated $7.3 billion, a figure that by itself would have set a record for overall trading even if the equities group produced nothing.

“We are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm,” Chief Executive Officer Jamie Dimon said in a statement. “This is why we can continue to serve all of our stakeholders and to pay our dividend — unless the economic situation deteriorates materially and significantly.”

Jpmorgan was the only major Wall Street bank that didn’t suffer a loss during the financial crisis, and the second-quarter results offer a hint at what’s to come when the rest of the largest US lenders report this week. The four biggest US banks’ combined earnings are expected to have fallen to the lowest in more than a decade in the second quarter, according to analyst estimates compiled by Bloomberg before Tuesday’s results.