US financial institution JP Morgan Chase reported a 51% decline in net income of US$4.7 billion for Q2 20 from the previous quarter. Net interest income slid by four percent to US$14 billion due to the impact of lower interest rates amid a Covid-19 environment.
The bank’s net revenue was boosted by 15% reflecting a figure of US$33.8 billion while the provision for credit losses also increased by US$9.3 billion, to US$10.5 billion. This was driven by reserve builds which reflect further deterioration and uncertainty from a macroeconomic perspective.
JP Morgan remains the top issuer of structured products in the US market from the previous quarter, according to SRP data.
In Q2, the US investment bank issued 926 products with a total sales volume of US$1.61 billion. This is a decrease from its Q1 20 issuance of 1,006 products, though its previous sales volume was higher at US$2.5 billion.
In Q2 19, JP Morgan was the second most prolific issuer trailing behind UBS at 665 structured products valued at US$1.59 billion.
The bank has 10,392 live structured products listed domestically that are wrapped as unregistered notes, registered notes (unlisted), exchange-traded notes, notes, certificates and certificates of deposit. The products are tied to 473 underlyings including Verizon, Swiss Market Index, SPDR S&P Oil & Gas Exploration & Production, S&P500, Nasdaq 100, and iShares MSCI Emerging Markets ETF.
The investments range in tenor from under a year to over six years, and fall under 13 assets classes, the most prominent of which are hybrid, interest rate, equity (single share, single index, share basket and index basket), and commodities.
By division
The bank’s consumer & community banking segment suffered net losses of US$176m in Q2 20, compared with US$4.7 billion in Q2 19 as a result of the reserve builds. Net revenue was US412.2 billion, a fall of nine percent.
Commercial banking net revenue climbed by 5% to US$2.4 billion as a result of higher deposit and loan balances, gains on strategic investments and higher deposit fees as well as investment banking revenue.
Asset & wealth management saw its net income knocked down by eight percent from Q2 19 to US$658m, and the corporate segment reported net losses of US$568m, compared with a net income of US$828m in Q2 19.
The corporate & investment bank division appeared to beat estimates on trading through the second quarter with a 85% increase in its net income from Q2 19. Banking, investment banking and markets & securities trading services revenues all soared by 46%, 91% and 77%, respectively.
Total risk-weighted assets stand at US$1.5 trillion, not wavering from its Q2 19 figure while derivatives value US$57.5 billion, up from its Q2 19 figure of US$41.5 billion.
‘Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy,’ said JP Morgan’s chief executive officer, Jamie Dimon (pictured).
Click here to view the second quarter earnings report.