JPMorgan tops estimated after posting $2.3 billion benefits on better-than-expected loan losses

JPMorgan-tops-estimated-after-posting -2.3-billion-benefits-on-better-than-expected-loan-losses

July 14, 2021: -JPMorgan Chase reported second-quarter profit and revenue that exceeded analysts’ expectations as the firm released money set aside for loan losses.

One key factor is that after the industry set aside tens of billions of dollars for loan losses in the previous year, banks are releasing reserves as borrowers have held up better than expected.

This happened at JPMorgan, the biggest U.S. bank by assets, in the second quarter. The firm posts a $2.3 billion benefit to release $3 billion in loan loss reserves to take $734 million in charge-offs. The bank had a $5.2 billion reserve release in the first quarter.

“Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve,” CEO Jamie Dimon said in the release.

“In particular, net charge-offs, from 53%, were better than expected, reflecting the increasingly healthy condition of the customers and clients.”

Trading revenue was expected to decline from the year-earlier period, which saw frantic activity in the aftermath of Federal Reserve actions to bolster markets during the early stage of the coronavirus pandemic.

Last month, Dimon said that while trade revenue will decline from the previous year, investment banking revenue was headed for a 20% jump because of strength in mergers fees, he said.

Analysts can ask Dimon about the succession of the bank planning after it named two senior executives, Marianne Lake and Jennifer Piepszak, to run its sprawling consumer bank. The changes lead to the promotion of global research head Jeremy Barnum to CFO succeeding Piepszak; this is Barnum’s first quarter handling the firm’s earnings release.

Dimon may also be asked about the acquisition strategy after making the third purchase of a fintech start-up in December. In the previous month, the bank agreed to buy ESG, which will investigate platform OpenInvest, CNBC reported first.

The shares of JPMorgan have climbed 24% this year, exceeding the $17% rise of the S&P 500 Index.

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