JPMorgan reports Q2 earnings miss - as CEO Jamie Dimon sounds the alarm on global growth

JPMorgan reports Q2 earnings miss - as CEO Jamie Dimon sounds the alarm on global growth
Jamie Dimon.REUTERS/Brian Snyder
  • JPMorgan's second-quarter earnings fell short of Wall Street's forecasts.
  • The bank was hit by a $1.1 billion credit-loss provision, plus lower banking fees and card income.

JPMorgan Chase reported second-quarter earnings on Thursday that fell short of Wall Street's expectations, sending its stock down as much as 4%. Net revenue fell in two of its four main divisions, while net income declined in all four segments.

The banking giant's performance primarily reflected a $1.1 billion provision for credit losses, compared to a $2.3 billion net benefit in the same period last year, when it released a net $3 billion of credit reserves.

The latest provision reflected $657 million in net charge-offs and a net $428 million increase in reserves last quarter, as the bank loaned more money and prepared for more defaults given the worsening economic outlook.

JPMorgan was also hit by a sharp decline in investment-banking fees, and less card income from retail customers. Those headwinds were only partially offset by higher markets revenue.

Here are the key numbers:

  • Revenue: $31.63 billion versus a consensus estimate of $31.97 billion from analysts polled by Bloomberg
  • Adjusted net income: $8.65 billion versus a $8.55 billion estimate
  • Adjusted EPS: 2.76 versus a $2.88 estimate

CEO Jamie Dimon trumpeted the bank's performance and the health of the US economy, but warned that tightening monetary policy, Russia's invasion of Ukraine, and recent surges in food and fuel costs have darkened the global economic outlook.


"The US economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy," he said.

"But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road."

JPMorgan's consumer-and-community-banking division reported a 1% rise in net revenue to $12.6 billion, as higher deposits more than offset lower card & auto and home-lending revenues. However, $761 million in credit-loss provisions, compared to a $1.9 billion release in the comparative period, fueled a 45% drop in net income to $3.1 billion.

The key corporate-and-investment-bank segment posted a 10% drop in net revenue to $11.9 billion, and a 26% plunge in net income to $3.7 billion. The main culprit was a 61% slump in investment-banking revenue due to lower fees across all of the subdivision's products. In contrast, equity-markets revenue and fixed-income-markets revenue both jumped 15%, driving markets-and-securities-services revenue up 8%.

JPMorgan's commercial-banking business grew net revenue by 8% to $2.7 billion, largely thanks to higher deposit margins. However, its net income dropped by 30% to $994 million as it swung from a $400 million release of credit reserves to a $209 million provision.


Finally, JPMorgan's asset-and-wealth-management division posted a 5% increase in net revenue to $4.3 billion, reflecting growth in deposits and loans on higher balances and margins. However, its net income slumped by 13% to $1 billion due to higher non-interest expenses. The segment's assets under management also shrunk by 8% to $2.7 trillion, as the market value of its assets dropped.