JPMORGAN Chase posted a 67 per cent jump in profit for the second quarter on Friday (Jul 14) as it earned more from borrowers’ interest payments and benefited from the purchase of First Republic Bank.

Shares of the largest US lender rose 2.4 per cent in premarket trading as it kicked off second-quarter results for the big US banks and CEO Jamie Dimon reassured investors that the economy remained resilient.

“Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. That being said, there are still salient risks in the immediate view” such as consumers using up their cash buffers, high inflation, quantitative tightening the war in Ukraine, he said in a statement.

The bank bought a majority of failed First Republic Bank’s assets in a government-backed deal in May after weeks of industry turbulence.

That bolstered its net interest income (NII), which measures the difference between what banks earn on loans and pay out on deposits.

The bank’s NII jumped US$21.9 billion, up 44 per cent, or up 38 per cent excluding First Republic.

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The bank sees NII of about US$87 billion for the full year, higher than the US$83.37 billion expected by Wall Street, according to Refinitiv IBES data.

JPMorgan’s profit climbed to US$14.47 billion, or US$4.75 per share, for the quarter ended Jun 30. That compares with US$8.65 billion, or US$2.76 per share a year earlier.

“It was very hard to find anything wrong with JP Morgan’s earnings... Consumer banking was particularly strong, but even investment banking, which has been a problem child over the past year or so, is starting to show signs of life,” said Octavio Marenzi, CEO of consultancy firm Opimas.

The results come against the backdrop of a possible end to Federal Reserve’s rate hikes that have swelled profits at big US banks in the past few quarters.

Dimon has cautioned against premature optimism on inflation, and said that the federal funds rates could go up to as much as 6 per cent or 7 per cent.

The rate currently stands in the 5 per cent to 5.25 per cent range, and investors are largely expecting just one more 25 basis points hike this year.

While the monetary tightening campaign has stalled mergers and acquisitions – another major source of income for banks, a flurry of initial public offerings has raised hopes of a nascent recovery in capital market activity.

Johnson & Johnson’s consumer health unit Kenvue and US restaurant group Cava have pulled off strong market debuts in New York this year.

Investment banking revenue for the quarter was US$1.5 billion, up 11 per cent from last year. Markets revenue fell 10 per cent, with both fixed income and equities trading taking a hit.

Sluggish trading revenues have prompted investment banks to trim their headcount as they rush to cut expenses. JPMorgan plans to cut around 500 jobs across different divisions, according to a source familiar with the matter told Reuters in May. REUTERS