JPMorgan Tops Q2 Earnings Forecast As Trading Revenue Surges; Dividend Remains But Share Buybacks Suspended

JPMorgan will set aside $10.5 billion to cover potential loan losses triggered by the coronavirus pandemic, but will continue to pay its quarterly dividend.

JPMorgan Chase & Co.  (JPM) - Get Report posted stronger-than-expected second quarter earnings Tuesday, but said it would suspend its share buyback plans through to at least the end of September and set aside more than $10 billion to absorb potential losses on bad loans.

JPMorgan said net income for the three months ending in June was pegged at $4.7 billion, or $1.38 per share, down 51% from the same period last year but firmly ahead of the Street consensus forecast of $1.04 per share. Group managed revenues, JPMorgan said, rose 11.5% to $33 billion, again topping analysts' estimates of a $30.3 billion tally.

The bank said loan loss provisions for the second quarter totaled $10.5 billion, a $9.3 billion increase from last year and up from the $8.3 billion tallied over the three months ending in March. Despite the huge credit provisions, however, JPMorgan will still pay its quarterly dividend of 90 cents per share, the company said.

“Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy," said CEO Jamie Dimon. "However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm. We ended the quarter with massive lossabsorbing capacity - over $34 billion of credit reserves and total liquidity resources of $1.5 trillion, on top of $191 billion of CET1 capital, with significant earnings power that would allow us to absorb even more credit reserves if needed." 

"This is why we can continue to serve all of our stakeholders and to pay our dividend - unless the economic situation deteriorates materially and significantly,” he added.  

JPMorgan shares were marked 0.8% lower in early trading immediately following the earnings release to change hands at $97.03 each, a move that leaves the stock with a year-to-date decline of around 29%.

Capital markets trading revenues soared over the three months, as market volatility surged during the worst of reactions to the cornoavirus crisis, with fixed income and commodities trading generating $9.7 billion in revenues -- up 80% from last year -- and equities notching up $2.4 billion in revenues.