In golf, they reserve the first to tee off for the most senior member of the foursome. On Wall Street, that honor is given to the nation’s largest Bank, JP Morgan Chase. This morning, as is customary, JP Morgan once again began the parade of Quarterly Corporate Results, which we call earnings season.
No doubt, CEO Jamie Dimon and the rest of the crew at the House of Morgan will be celebrating today’s results. The venerable old Bank set new records with adjusted Net Revenue of $42.4 billion and fully diluted earnings per share of $4.75. It’s the most money ever made by the 200-year-old banking institution.
Two factors paid a significant role in the Bank’s Second Quarter success. The first was the recent takeover of First Republic Bank. Regulators took over the regional Bank and then sold it to JP Morgan. Morgan now estimates that this “bargain” transaction provided a $1.8 billion gain for the quarter.
The second significant boost to Morgan’s earnings came from the Federal Reserve’s higher interest rates. For Morgan, these new rates translated into $21.8 billion in net interest income, another record for the Bank.
However, a byproduct of higher interest charges is those who cannot make monthly payments. Credit costs for Morgan included a $1.4 Billion written-off and an additional $1.5 billion reserve against future write-offs. Together, that’s $2.9 billion that Morgan believes they will lose in the foreseeable future—quite a contrast to the mere $.8 Billion they had in reserve last year.
These are stunning results by JP Morgan Chase, aided by a timely acquisition and higher interest rates.
For JP Morgan Chase’s complete earnings report, go here:
