The increase in Q2 2023 numbers suggests that JPMorgan has not been adversely affected by its recent acquisition of First Republic Bank.
US multinational financial services giant JPMorgan Chase & Co. (NYSE:JPM) has reported second-quarter 2023 numbers that beat analyst expectations. Much of the company’s growth was due to higher interest income and interest rates.
JP Morgan reported total revenue of $42.4 billion in the second quarter of 2023, beating Refinitiv’s forecast of $38.96 billion. The company also reported adjusted earnings per share of $4.37, versus the $4 expected.
JP Morgan had a strong quarter with net income of $14.5 billion, up 67%, or a 40% surge, excluding the First Republic acquisition. In pre-market trading, JPM is trading at $153.56, 3.24% higher than the previous close of $148.87. The company’s stock is also up nearly 4% in one month, more than 7.3% in three months, and 11% year-to-date. Additionally, JPM has risen nearly 32% over the past year.
JP Morgan’s rise came on the back of tremendous pressure on the banking sector. Since last month, local banks have reported a decline in interest income, which is expected to rise further in the near future. As a result, lenders are reportedly preparing additional reserves as the economy falters. Estimates suggest that JPMorgan will book $2.72 to cover credit losses.
Increased in Q2 2023 as JP Morgan raises earnings targets
After successfully acquiring First Republic Bank in early May, JPMorgan raised its key revenue target for 2023 to $84 billion. In an investor presentation, the bank raised its target from $3 billion after reporting impressive numbers for the first quarter of 2023. After that, Q1 profit increased 52% and revenue increased 25% year-over-year (YoY).
JP Morgan has formally acquired First Republic Bank, including all deposits and a number of shares. The deal included JP Morgan underwriting approximately $30 billion in securities and $173 billion in loans belonging to First Republic.Post-acquisition, JP Morgan dismissed It had about 1,000 First Republic staff and provided full-time or temporary employment for about 7,000 workers. However, episodic roles may last him only three months to one year. First Republic employees who were not offered any role were to receive 60 days of benefits, lump sums and benefits.
JP Morgan predicts ‘hard landing’ for UK economy
JP Morgan economist Alan Monks has warned of a slump in the UK economy as interest rates continue to rise. Monks believes the Bank of England (BoE) could “under some scenarios” peak interest rates at 5.75% or continue to raise them to as high as 7%.
Monks said there are many reasons why the Bank of England can keep raising rates. The monks said higher inflation could trigger a “sustained wage-price spiral” and spur continued rate hikes. The analyst also believes that short-term expectations of keeping inflation under control could ultimately lead to higher rate hikes, even if long-term policy remains stable. Monks has warned that this could force central banks to raise interest rates faster than JPMorgan expects.
Bank of England Governor Andre Bailey’s comments acknowledge that rising inflation and the interest rates used to combat it are factors that hurt the public. But Bailey said the central bank’s priority was to keep inflation under control.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to explain the cryptocurrency story down to the basics so that anyone, anywhere can understand it without a lot of background knowledge. When not digging into cryptocurrencies, Tolu enjoys music, loves to sing, and is an avid movie buff.
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