JPMorgan (JPM) -) posted stronger-than-expected second quarter earnings Friday thanks in part to a boost in net interest income linked to its purchase of failed lender First Republic earlier this spring.
JPMorgan said earnings for the three months ending in June were pegged at $14.47 billion, or $4.75 per share, up 58.3% from the same period last year and well ahead of the Street consensus forecast of $4.00 per share.
Managed revenues, JPMorgan said, rose 34.2% from last year to $42.4 billion, again well ahead of analysts' estimates of a $39 billion tally, while expenses were up 11% at $20.822 billion. The bank also built $2.9 billion in reserves to set against bad loans and credit losses, including $1.2 billion linked to its purchase of First Republic earlier this spring, clipping around 30 cents a share from its bottom line
Net interest income was $21.9 billion, up 44% from the same period last year and an all-time , JPMorgan said, with around 6 percentage points of the gain coming from First Republic. That helped offset a slide sales from other parts of the bank, where equity market revenues were down 20% to $2.5 billion and fixed income revenues fell 3% to $4.6 billion.
"The U.S. economy continues to be resilient. Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly," said JPMorgan CEO Jamie Dimon. "Labor markets have softened somewhat, but job growth remains strong. That being said, there are still salient risks in the immediate view—many of which I have written about over the past year."
"Consumers are slowly using up their cash buffers, core inflation has been stubbornly high (increasing the risk that interest rates go higher, and stay higher for longer), quantitative tightening of this scale has never occurred, fiscal deficits are large,and the war in Ukraine continues, which in addition to the huge humanitarian crisis for Ukrainians, has large potential effects on geopolitics and the global economy," he added. "While we cannot predict with any certainty how these factors will play out, we are currently managing the Firm to reliably meet the needs of our customers and clients in all environments."
JPMorgan shares were marked 31.56% higher in early Friday trading immediately following the earnings release to change hands at $150.93 each.
JPMorgan purchased First Republic on May 1 after a sale brokered by the Federal Deposit Insurance Corp. following the lender's liquidity issues earlier in the spring.
The California Department of Financial Protection and Innovation took control of First Republic in late April, while appointing the FDIC as its official receiver.
The agency also announced that JPMorgan -- the bank which in March led a $30 billion effort to boost First Republic's deposit base -- had emerged as the preferred bidder for the bank's assets.
