NEW YORK – A surge in investment banking pushed up JPMorgans second-quarter profit even as results at its consumer business sagged.
JPMorgan earned a bonanza in fees from underwriting stock and bond offerings in the first three months of the year as financial markets thrived. The gain offset a slight decline at the banks consumer business, which struggled with lower mortgage fees.
The bank made $6.1 billion in the second quarter after stripping out payments to preferred shareholders. That was up 32 percent from the same period a year ago, when it made $4.6 billion.
JPMorgan and other banks have benefited from the Federal Reserves easy-money policies, which have encouraged corporations to borrow money and consumers to refinance mortgages. While rates have been going higher in recent weeks as investors anticipate the Feds eventual exit from economic stimulus, JPMorgans CEO Jamie Dimon said that wasnt a cause for worry.
All things being equal, rates going up is a good thing, as long as the economy keeps growing, Dimon said in an interview on CNBC.
If anything, rising rates should boost JPMorgans profits, said Shannon Stemm, financial services analyst for Edward Jones, a wealth adviser. As the economy strengthens, not only would demand for loans increase, the loans would also be made at higher rates. You dont want (rates) to go up too fast, Stemm said. But rising rates are ultimately going to be positive for the banks.
While higher rates will benefit many parts of the banks business, they will have a significant impact on mortgage refinance volumes and margins, the banks chief financial officer, Marianne Lake, said. The bank was still confident that it could increase its share of the overall mortgage market even as the recent refinancing boom winds down, Lake added.