JPMorgan Reports Higher Profit, Boosted by Trading, Stronger Economy

JPMorgan Chase

JPM 0.43%

& Co. said Friday that second-quarter profit rose as loan growth improved and trading boosted its results.

Shares rose about 1% in premarket trading after the results were announced.

The bank reported a profit of $8.3 billion, or $2.29 a share, topping expectations of $2.22 a share among analysts polled by Thomson Reuters.

Investors will next turn to the bank’s earnings call Friday morning to find out whether Chief Executive

James Dimon

or Chief Financial Officer Marianne Lake will shed light on topics ranging from details of the bank’s growth plans to insight into its trading revenue, which could foreshadow results across Wall Street.

JPMorgan’s trading revenue increased 13% to $5.4 billion from $4.8 billion a year earlier.

Daniel Pinto,

the bank’s co-president and head of its corporate and investment bank, said in late May that trading is expected to be flat in the second quarter of 2018 compared with the year-earlier period. Mr. Pinto added that there is “good performance” in rates and commodities that balance headwinds in emerging markets.

Return on equity, a measure of profitability, was 14% in the second quarter compared with 12% a year ago.

The boost from still low—but rising—interest rates will also likely be a major focus for investors, as an increase in rates can help the profitability of big consumer lenders like JPMorgan. The bank reported that net-interest income in the second quarter was $13.6 billion, up 9% from a year ago.

Total loans at JPMorgan rose to $935.16 billion, up 4% from the year-earlier period and rising 2% from the first quarter of 2018.

Overall profit at the corporate and investment bank was $3.2 billion, an 18% increase from $2.71 billion in the same period last year. In the consumer bank, profits were $3.41 billion compared with $2.22 billion in the second quarter a year ago. JPMorgan’s commercial bank earned $1.09 billion, a 21% increase from the $902 million it earned in the year-ago quarter, and the bank’s asset and wealth-management unit reported profits of $755 million compared with $624 million in the second quarter of 2017.

One weak area: home lending. JPMorgan extended $21.5 billion in mortgages in the quarter, a decrease of 10% from the $23.9 billion the bank extended in the second quarter a year ago. Revenue in its mortgage division, one of the largest in the United States by volume, was $1.35 billion, down 6% from the $1.43 billion it reported in the year-earlier period.

JPMorgan set aside $1.21 billion in the second quarter to cover loans that could potentially sour in the future. That compares with $1.17 billion in the first quarter of 2018 and $1.22 billion in the second quarter of 2017. The bank lost $1.1 billion to loan defaults, 0.56% of its overall portfolio, compared with a 0.58% charge-off rate in the second quarter of 2017.

Costs increased to $15.97 billion from $14.77 billion a year earlier. The bank said in late February that total costs are expected to rise to around $62 billion in 2018 from $58.5 billion in 2017.

Legal costs were flat in the second quarter, compared with a expenses of $70 million in the first quarter of 2018 and costs of $61 million a year earlier.

Write to Emily Glazer at

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