Finding the silver lining in JPMorgan’s Q2 earnings report

Mark O'Donnellon 15/07/2022|
2 min read

Yesterday, JPMorgan Chase (NYSE: JPM) reported that the bank’s second-quarter earnings fell  as a result of adding $428 million in bad loan reserves.  

With this view, JPMorgan has chosen to temporarily halt its share repurchases in order to meet  regulatory capital requirements. 

According to a statement from JPMorgan, the reserve rise was primarily to blame for the  earnings decline of 28% from a year earlier to $8.65 billion. Additionally, JPMorgan, which has  one of the largest operations on Wall Street, was hurt by the slowdown in Wall Street  transactions. Investment banking fees dropped sharply by 54% to $1.65 billion, $250 million  less than the forecasted $1.9 billion. 

Fixed income trading revenue increased by 15% to $4.71 billion, Although, strong results in  macro trading were offset by a decline in credit and securitized products, resulting in a quarter end revenue that was below analysts’ $5.14 billion projection.  

On the positive side of its report, revenue from equity trading increased by 15% to $3.08 billion,  beating the estimate of $2.96 billion. Rising U.S. interest rates and a growing book of loans are  two positive factors for the firm. For the quarter, net interest income increased by 19% to $15.2  billion, exceeding analysts’ expectations of $14.98 billion. JPMorgan stated during the firm’s  investor day in May that rising rates will allow it to surpass its main goal of 17% returns this  year faster than anticipated. However, the firm has achieved that goal this month.


JPM stock dropped about 5% in intra-day trading on Thursday but found the support to finally  settle only 3.5% lower at closing. JPM now trades at a 90-week low, but with a rumored 100  basis-points rate hike due from the US Federal Reserve within a couple weeks, perhaps bank  stocks will find their bottom before the rest of the market.