JPMorgan trading revenue surges as coronavirus upends markets
Bank expects to keep paying 90-cent dividend in third quarter
JPMorgan Chase, the largest U.S. lender, posted higher profit than analysts estimated as the COVID-19 pandemic hammered the country's economy in the three months through June.
Profit of $1.38 a share compared with the $1.04 average estimate from analysts surveyed by Refinitiv, even as earnings shrank 51 percent to $4.7 billion, thanks in part to lower profit margin on loans as the Federal Reserve slashed interest rates.
Revenue climbed 15 percent to $33.8 billion, the company said, with stock and bond trading growing 79 percent to $9.7 billion as investors nationwide moved money to safer assets and took advantage of market volatility. Bond trading climbed 99 percent, while stocks expanded 38 percent.
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While U.S. stocks have rallied from March lows as the worst downturn since the Great Depression began easing, a rebound in infections has introduced a fresh threat.
"Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy," CEO Jamie Dimon said in a statement. "However, we are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 239.38 | -3.65 | -1.50% |
| C | CITIGROUP INC. | 68.52 | -0.10 | -0.15% |
| WFC | WELLS FARGO & CO. | 73.18 | -0.26 | -0.35% |
JPMorgan ended the quarter with $34 billion of credit reserves and liquidity resources of $1.5 trillion, he said.
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Unless economic conditions worsen meaningfully, the bank intends to maintain its dividend payment of 90 cents in the third quarter, Chief Financial Officer Jen Piepszak told reporters on Tuesday.
"We can easily get through very, very tough times and never cut the dividend."
"We've always run the company so that we can handle adverse times because in my short lifetime, I've seen crises over and over and over and over. We're not predicting them. We're just prepared for them," Dimon told analysts later.
While the board would consider reducing the payout if circumstances warranted, he said, "we can easily get through very, very tough times and never cut the dividend."
The significance of JPMorgan's plans is heightened by rival Wells Fargo's announcement that it expects to cut its dividend 80 percent to 10 cents a quarter as the pandemic's fallout roils a company still grappling with a four-year-old fake accounts scandal.
"We are deeply disappointed," Wells Fargo CEO Charles Scharf said in a statement. "While the negative impact of the pandemic is unprecedented and many of our business drivers were negatively impacted, our franchise should perform better, and we will make changes to improve our performance regardless of the operating environment."