Shares of the largest U.S. lender rose 2.6% in premarket trading as it kicked off second-quarter results for the big U.S. banks and CEO Jamie Dimon reassured investors that the economy remained resilient.
"Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. That being said, there are still salient risks in the immediate view," he said in a statement.
Dimon flagged high inflation, consumers using up their cash buffers, quantitative tightening and the war in Ukraine as some of the risks.
The bank bought a majority of failed First Republic Bank's assets in a government-backed deal in May after weeks of industry turbulence.
That bolstered its net interest income (NII), which measures the difference between what banks earn on loans and pay out on deposits.
The bank's NII, which has also been gaining from high interest rates, was $21.9 billion, up 44%, or up 38% excluding First Republic.
The bank forecast NII of about $87 billion for the full year, higher than the $83.37 billion expected by Wall Street, according to Refinitiv IBES data.
Its profit climbed 67% to $14.47 billion, or $4.75 per share, for the quarter ended June 30. Excluding one-time costs, the bank earned $4.37 per share, comfortably above analysts' average estimate of $4.00 per share.
"It was very hard to find anything wrong with JP Morgan’s earnings," said Octavio Marenzi, CEO of consultancy firm Opimas.
"Consumer banking was particularly strong, but even investment banking, which has been a problem child over the past year or so, is starting to show signs of life."
The results come against the backdrop of a possible end to Federal Reserve's rate hikes that have swelled profits at big U.S. banks in the past few quarters.
Dimon has cautioned against premature optimism on inflation, and said that the federal funds rates could go up to as much as 6% or 7%.
The rate currently stands in the 5% to 5.25% range, and investors are largely expecting just one more 25 basis points hike this year.
While the monetary tightening campaign has stalled mergers and acquisitions - another major source of income for banks, a flurry of initial public offerings has raised hopes of a nascent recovery in capital market activity.
Investment banking revenue for the quarter was $1.5 billion, up 11% from last year. Markets revenue fell 10%, with both fixed income and equities trading taking a hit.
Sluggish trading revenues have prompted investment banks to trim their headcount as they rush to cut expenses. JPMorgan plans to cut around 500 jobs across different divisions, a source familiar with the matter told Reuters in May.
The bank also set aside $2.9 billion as provision for credit losses, more than doubling from last year.
