Profits for JPMorgan Chase (JPM) surged in the second quarter, a show of strength that reinforces the divide between the industry's largest bank and its smaller rivals.
The largest US bank reported earnings of $14.5 billion that were up 67% from the same period a year ago. Its revenue of $41 billion was up 34%.
Its stock rose more than 3% in pre-market trading.
"The US economy continues to be resilient," said JPMorgan CEO Jamie Dimon. "Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly."
The result kicked off a closely watched earnings season where banks of all sizes will be trying to show that they recovered from one of the most challenging periods for the industry since the 2008 financial crisis.
JPMorgan demonstrated its hold over the rest of the industry during the chaos of the spring by winning a government-run auction to purchase the bulk of operations of First Republic after regulators seized the San Francisco lender.
First Republic was one of three sizable regional banks to fail, along with Silicon Valley Bank and Signature Bank. Their seizures triggered a panic in the banking system and outflows of depositors from a number of smaller banks.
First Republic added a net of $2.4 billion in income to JPMorgan in the quarter, the bank said Friday.
JPMorgan’s results demonstrated that it is still able to make lots of money from its loans while leaning on its sprawling franchises to generate additional revenue.
Its net interest income, which measures the difference between what it charges to make loans and pays for deposits, rose 44% from a year ago to $21.9 billion.
Many of its smaller rivals are revising down their expectations of how much net interest income they can earn due to rising deposit costs and high interest rates from the Federal Reserve.
JPMorgan’s results, however, do point to some challenges that the entire industry is facing at the moment.
It set aside $2.9 billion to cover future loan losses, which were up 163% from a year ago, a sign the bank expects the economy to slow in the coming quarters. Many banks are expected to add more such provisions to their second quarter results.
The bank also struggled with trading and a recent drought of deal making that is making day-to-day life more difficult for Wall Street. Its investment banking fees fell by 6% from a year ago to $1.5 billion. Its trading revenues from equities and fixed income also fell.
Some of its rivals that depend even more heavily on this revenue, such as Goldman Sachs (GS) and Morgan Stanley (MS), are expected to be particularly challenged by this recent slowdown. They both report results next week.
Across the industry, global investment banking revenues for the second quarter fell by 52% from a year ago, according to Dealogic.
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