By
Bhushan Akolkar
April 8th, 2024
JPMorgan’s corporate and investment banking businesses did pretty well during the pandemic period which helped the Wall Street giant to offset the losses of its consumer retail and commercial business. JPM stock price is rising.
Just at a time when the U.S. economy is on the edge of a sharp recession, Wall Street banking giant JPMorgan & Chase (NYSE: JPM) has managed to deliver massive revenue for Q2 2020. The banking giant reported a $33.8 billion as its second-quarter revenue for 2020. Meanwhile, JPM stock is up. Yesterday it gained 0.57% to trade at $98.21. After hours it those by another 0.99% to reach $99.18.
Beating analysts’ expectations, JPMorgan also reported a net profit of $4.69 billion in Q2. Market analysts are praising the leadership qualities of CEO Jamie Dimon who took the investment bank to new heights of success following the 2008 financial crisis.
At $4.69 billion net income, the earnings-per-share stood at $1.38 against the expected $1.04. The revenue output has also exceeded the expectations by 10%.
Over the last few months, the Federal Reserve has initiated some unprecedented measures to support the credit markets. Besides, the central bank has also created a conducive environment for trading on debt and equity issuance over the last few years. Under Dimon’s leadership, JPMorgan made strong and bold moves to grab a pie of the investment banking market. But in a word of caution to investors, CEO Jamie Dimon said:
“Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy. However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm.”
How Did JPMorgan Manage to Offset Losses in Q2?
The banking giant has managed well to offset the losses in its consumer and commercial banking business. JPMorgan has set aside $8.9 billion for expected loan defaults across multiple operations.
On the other hand, the bank’s corporate and investment banking business posted a $5.5 billion profit during Q2 2020. This is phenomenal considering that most other banks couldn’t even manage it during the pre-COVID era. The investment banking revenue alone has jumped 91% to $3.4 billion as part of the advisory fees. The bank also helped its big corporate clients to tap the debt and equity markets and build equity positions during this uncertain market condition. Daniel Pinto, co-president of JPMorgan and head of the corporate and investment bank, said:
“We’ve raised record amounts of capital for our clients, advised them on strategic opportunities and helped them navigate the markets, all while facing personal challenges caused by the pandemic. It’s difficult to predict what the rest of 2020 will look like, but we do expect to return to more normal activity levels.”
Beating market expectations, the bank’s strong fixed-income trading helped the revenue jump 79% to $9.7 billion. However, its retail banking business reported a $176 million loss compared to $4.2 billion in profits a year earlier.
Speaking about the improvements in the global economy, Dimon said that the odds of recovery are very favorable during H2 2020. But the bank is cautiously watching the recent progression of the COVID-19.