JPMorgan and Morgan Stanley reported second quarter financial results before market open Thursday that were well below analyst expectations. JPM stock fell 3.5% during market hours to $108. Morgan Stanley shares recovered from their early-morning skid and closed at $74.73, down less than 1% on the day.
JPMorgan earnings per share fell 27% over the year to $2.76, while revenue was relatively flat at $30.7 billion. Wall Street analysts were expecting earnings to fall to $2.92 per share from last year's period of $3.78. JPMorgan really missed revenue estimates, which were forecast to increase 4.3% to $31.81 billion. The bank is planning to suspend its share buyback program following the results.
"The U.S. economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy," CEO Jamie Dimon said in the announcement. But, he says, high inflation, weakening consumer confidence, high interest rates, "never-before-seen" quantitative tightening and international conflicts will likely have negative consequences on the global economy down the road.
JPMorgan's gross investment banking revenue fell 32% to $788 million. Provisions for credit losses increased to $1.1 billion, which included $428 million from the reserve build and $657 million of net charge-offs.
As a result of JPM's recent stress tests, the bank will build capital and focus on managing its capital ratios, Dimon said in the announcement. "In order to quickly meet the higher requirements, we have temporarily suspended share buybacks which will allow us maximum flexibility to best serve our customers, clients and community through a broad range of economic environments."
The Big Picture: Today's Stock Market
Morgan Stanley Earnings
Morgan Stanley earnings fell to $1.39 per share, down 25% from the $1.85 recorded for the period in 2021. Revenue declined 11% to $13.1 billion over the year. Analysts were expecting EPS to fall to $1.57 on revenues of $13.4 billion.
"Overall the Firm delivered a solid quarter in what was a more volatile market environment than we have seen for some time," CEO James Gorman said in the announcement. Morgan Stanley's equity and fixed income was able to partially counter weaker investment banking activity, he said.
MS investment banking revenue fell to $1.2 billion, down 55% over the year. Fixed income revenue jumped 49% to $2.5 billion and equity revenue increased to $2.9 billion, up 6% from last year's period. In the report, Morgan Stanley noted a $200 million impairment from a regulatory investigation into unapproved personal devices and the bank's record-keeping requirements.
JPM Stock, MS Stock Analysis
Like most bank issues, both Morgan Stanley and JPM stock are trading far below recent highs. The JPM is down more than 37% from a peak near 173 in October. Morgan Stanley is trading 31% off a February peak.
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