JPMorgan Chase & Co has today reported a 155% jump in profit thanks to the release of loss reserves and a surge in dealmaking.
But the largest US bank suffered from a well-flagged slowdown from last year's record-breaking trading results.
The bank's shares fell 1.5% as overall corporate and investment banking revenues declined 19%, mainly due to a slump in bond trading.
The Wall Street behemoth, whose fortunes tend to reflect the health of the US economy, released roughly $3 billion from the reserves it had set aside in anticipation of a wave of pandemic-related loan defaults.
As pandemic restrictions ease and the economy normalises, the unprecedented volatility in financial markets that boosted revenues at the bank's trading outfit last year is also expected to drop.
Analysts have pointed out that the levels of trading activity witnessed last year were unsustainable.
Overall trading revenue slumped 28% to $8.1 billion, hurt mainly by weakness in bond trading, which was down 44% from last year. Equity markets was a bright spot, with revenue up 13%.
The bank's net income rose to $11.9 billion, or $3.78 per share, in the quarter ended June 30, from $4.7 billion, or $1.38 per share, a year earlier. However, overall revenue fell 7% to $31.4 billion.
Analysts on average had expected earnings of $3.21 per share, according to Refinitiv.
"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," JPMorgan's chief executive Jamie Dimon said.
Excluding the boost from reserve releases, JPMorgan's net quarterly profit came in at $9.6 billion.
Last year, banks were forced to set aside billions for possible loan defaults. But accommodative monetary policy and stimulus checks kept the US consumer healthier than initially feared, allowing banks release more of their reserve capital.
Widespread vaccinations have led large parts of the US to ease pandemic restrictions, setting the stage for a broader economic recovery.
Despite the trading slump, overall Wall Street banking remained strong during the first half of the year, on the back of a record volume of large deals.
Capital markets also remained active and a surge in IPOs more than made up for a slowdown in deals made through special purpose acquisition companies (SPACs).
While average loans in JPMorgan's consumer & community banking unit were down 12%, there were signs that spending was bouncing back.
Combined debt and credit card spend was up 22% in the quarter compared to the same time in 2019, which is considered more reflective of normal spending patterns than last year's quarter.
Goldman Sachs, Wall Street's premier investment bank, also reports results today.
