By David Henry and Tanya Agrawal
JPMorgan Chase (JPM), the biggest U.S. bank by assets, said Tuesday that second-quarter profit fell 8 percent after customer stock and bond trading volume dropped and mortgage lending fees plunged.
The results weren't as bad as investors had feared, and the bank's shares rose 4.2 percent to $58.67 in morning trading.
Chief Executive Officer Jamie Dimon said the bank had seen "encouraging signs" across its businesses toward the end of the quarter, including businesses drawing more from credit lines. But the bank's executives also sounded notes of caution, noting that it was "too early to assume that this momentum will continue."
Speaking on a conference call with analysts, Dimon said that companies still aren't stepping up capital spending. On a conference call with reporters, Chief Financial Officer Marianne Lake said the pickup in bond trading revenue that the bank saw in June has not continued through July.
The report is the bank's first since Dimon disclosed that he had throat cancer.
Dimon told reporters Tuesday, "I feel great," and added that he would stay engaged with the business as he underwent treatment. He said for the first time that he was advised to take a few weeks of rest after his eight weeks of treatment.
The bank's net income fell to $5.99 billion, or $1.46 a share, from $6.5 billion, or $1.60 a share, in the same quarter of 2013. Revenue fell 3 percent to $24.45 billion.
%VIRTUAL-WSSCourseInline-963%Analysts on average had expected earnings of $1.29 a share, according to Thomson Reuters I/B/E/S.
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, but the drop was less than projected.
Executives had said during the quarter that capital markets revenue was running about 20 percent less than a year earlier, and below expectations at the start of the year.
Goldman Sachs Group (GS), which also reported Tuesday, said quarterly earnings rose 5 percent, powered by its investment and lending business. Income from fixed income, currency and commodities fell 10 percent.
Citigroup (C), which reported Monday, said income from stock and bond trading fell 15 percent, excluding an accounting adjustment -- well below the 20-25 percent fall it had braced the market for in May.
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.
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-raising.
JPMorgan has also been increasing its focus on wealth management, and private banking revenue rose 5 percent to $1.6 billion as client assets rose 15 percent to $2.5 trillion.
Mortgage Lending Drops
JPMorgan, the second largest U.S. mortgage lender after Wells Fargo (WFC), 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 has 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 said total assets at end-June stood at $2.52 trillion, up from $2.48 trillion at the end of March.
By David Henry and Tanya Agrawal