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JPMorgan Beats Earnings Forecast as Investment Banking Revenue Surges

A 37% surge in investment banking revenues, as well as the release of $3 billion in bad loan provision, lifted JPMorgan's second quarter earnings to a Street-beating $3.78 per share.

JPMorgan Chase & Co.  (JPM) - Get JP Morgan Chase & Co. Report posted much stronger-than-expected second quarter earnings Tuesday, thanks in part to the release of $3 billion in provisions set aside to for bad loans and a big jump in investment banking revenues. 

JPMorgan said earnings for the three months ending in June were pegged at $3.78 per share, up 174% from the same period last year and well ahead of the Street consensus forecast of $3.18 per share. 

Group revenues, JPMorgan said, fell 7.15% to $31.4 billion, but again came in ahead of analysts' estimates of a $29.9 billion tally, with investment banking revenues up a massive 37%. Net interest income, however, fell 8% to $12.9 billion.

"JPMorgan Chase delivered solid performance across our businesses as we generated over $30 billion in revenue while continuing to make significant investments in technology, people and market expansion," said CEO Jamie Dimon. "This quarter we once again benefited from a significant reserve release as the environment continues to improve, but as we have said before, we do not consider these core or recurring profits. Our earnings, not including the reserve release, were $9.6 billion. Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve." 

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JPMorgan shares were marked 1.4% lower in early trading immediately following the earnings release to change hands at $156.15 each.

Last month, Dimon said the bank was adding to its cash stockpiles, which are nearly $500 billion, in order to put it to work at higher rates over the second half of the year.

"I think you're also going to have a very, very strong economy," he said. "We try to take all that in consideration (when) we manage the balance sheet."

Since then, however, benchmark 10-year Treasury note yields have fallen more than 30 basis points, to 1.366%, as growth and inflation data moderated amid a global resurgence in Delta-variant coronavirus infections.