J.P. Morgan Chase & Co. said its second-quarter profit rose 13% as a boost from lending and rising rates offset weaker trading results for the nation's biggest bank by assets.
Shares slipped 0.2% premarket even as earnings and revenue beat the expectations of Wall Street analysts.
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The bank reported a profit of $7.03 billion, or $1.82 a share. That compares with a profit of $6.2 billion, or $1.55 a share, in the same period of 2016. Analysts polled by Thomson Reuters had expected earnings of $1.58 a share.
Revenue rose 4.7% to $26.41 billion. Analysts had expected $24.96 billion.
Investors will next turn to the bank's earnings call Friday morning to find out whether Chief Executive James Dimon or Chief Financial Officer Marianne Lake will shed light on topics ranging from the bank's trading revenue, which could foreshadow results across Wall Street, and further views on long awaited regulatory changes from the Trump administration.
The boost from still low -- but rising -- interest rates will also likely be a major focus, as an increase in rates can help the profitability of big consumer lenders like J.P. Morgan. While rates have risen as the Federal Reserve has increased its short-term target, the difference between short- and long-term rates, known as the yield curve, has flattened. It is better for banks when the yield curve is steeper.
J.P. Morgan's trading revenue decreased 14% to $4.8 billion from $5.56 billion a year earlier. The larger fixed-income trading business posted a 19% decline to $3.22 billion, while equities trading revenue slipped 0.9% to $1.59 billion.
Costs increased 6.4% to $14.51 billion from $13.64 billion a year earlier. Executives said in a February investor presentation that expenses are expected to rise in 2017 to fund investments and growth.
Return on equity, a measure of profitability, was 12% in the second quarter compared with 10% a year earlier.
The bank's provision for credit losses fell to $1.22 billion from $1.4 billion a year earlier.
Since the election, J.P. Morgan's shares are up 33% alongside a 29% jump in the KBW Nasdaq index of bank stocks.
After a volatile 2016, large U.S. banks' stocks had come roaring back since the election, especially as the Trump administration nominated people with deep Wall Street experience to key posts. But with no action yet in key areas like tax, bank stocks have struggled to gain much further ground.
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(END) Dow Jones Newswires
July 14, 2017 07:45 ET (11:45 GMT)