JPMorgan Chase & Co., the biggest U.S. bank by assets, reported an 8 percent decline in second-quarter profit as a pullback in trading of bonds and currencies by big institutions hit revenue in its securities trading business.
Net income fell to $5.99 billion, or $1.46 per share, from $6.5 billion, or $1.60 per share, in the same quarter of 2013. Revenue fell 3 percent to $24.45 billion.
Analysts on average had expected earnings of $1.29 per share, according to Thomson Reuters I/B/E/S.
JPMorgan shares were up 2.1 percent at $57.47 in premarket trading on Tuesday. Up to Monday's close, the stock had risen just over 2 percent since the start of the year, slightly underperforming the KBW bank stock index.
"Toward the end of the second quarter, we saw encouraging signs across our businesses including an uptick in wholesale utilization, strengthening pipelines in our commercial and business banking segments, and some improvements in markets activity," Chief Executive Jamie Dimon said in a statement.
Revenue from fixed-income and equity markets fell 15 percent to $3.5 billion in the quarter ended June 30 compared with the year-earlier quarter.
Goldman Sachs Group Inc., which also reported on Tuesday, said quarterly earnings rose 5 percent, powered by its investment and lending business. Income from fixed income, currency and commodities fell 10 percent.
JPMorgan executives have said that institutional investors seem to be shying away from bonds because of a lack of strong opinions about future moves in interest rates and currencies.
Bankers maintain that volumes will rebound eventually, but some investors worry that much business may be lost forever due to regulatory changes designed to make the banking system safer.
Investment banking fees rose 3 percent to $1.8 billion, driven by a 31 percent rise in advisory fees as strong equity markets encouraged deals and capital raisings.
MORTGAGE LENDING DROPS
JPMorgan, the second largest U.S. mortgage lender after Wells Fargo & Co, said its profit from mortgage lending fell 38 percent to $709 million, while mortgage application volumes dropped 54 percent to $30.1 billion.
Overall U.S. mortgage lending volumes have fallen for the past 15 months as mortgage rates have risen. Demand for loans was also hit by a weaker spring selling season compared with last year.
Wells Fargo, which reported last Friday, said its mortgage revenue dropped 39 percent in the quarter.
Non-interest expenses fell 3 percent to $15.43 billion.
JPMorgan executives said last month that the bank was on track to hold full-year expenses to less than $59 billion, excluding litigation costs.
Core expenses totaled $59 billion last year.
Some of the expense reduction is expected to come from simply paying capital markets traders less because they are generating less revenue in the slower bond market.
JPMorgan said total assets at end-June stood at $2.52 trillion, up from $2.48 trillion at the end of March.
The report is the bank's first since Dimon disclosed that he had throat cancer and would undergo treatments while continuing his job.
© 2023 Thomson/Reuters. All rights reserved.