The increase in the Q2 2023 numbers shows that JPMorgan has not been adversely affected by its recent acquisition of First Republic Bank.
US multinational financial services giant JPMorgan Chase (NYSE: JPM) announced its second-quarter 2023 numbers, beating expectations set by analysts. Much of the company’s rise came from increased interest income and interest rates.
JPMorgan reported total revenue of $42.4 billion for the second quarter of 2023, above the $38.96 billion estimated by Refinitiv. The company also reported adjusted earnings per share of $4.37 for $4.
JPMorgan had a good quarter with net income of $14.5 billion, up 67%, or up 40% excluding the acquisition of First Republic. In pre-market trading, JPM is trading at $153.56, up 3.24% from its 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. In addition, JPM has risen nearly 32% in the past year.
JPMorgan’s rise comes after a lot of pressure on the banking sector. Since last month, regional banks have reported lower interest income, with more expected in the near future. Thus, lenders are said to be preparing to make more provisions as the economy falters. It is estimated that JPMorgan will post $2.72 to cover credit losses.
The increase in the second quarter of 2023 follows the targeted increase in revenue for JPMorgan
After successfully acquiring First Republic Bank in early May, JPMorgan raised its primary revenue target for 2023 to $84 billion. During an investor presentation, the bank increased the target from $3 billion after reporting impressive numbers for the first quarter of 2023. Earnings then jumped 52% in the first quarter, with revenue up 25% year-over-year.
JPMorgan officially acquired First Republic Bank, including all deposits and a large number of shares. The deal included JPMorgan acquiring nearly $30 billion in securities and $173 billion in loans, all owned by First Republic. After the acquisition, JPMorgan Disqualified First Republic has approximately 1,000 employees and has offered employment to approximately 7,000 workers in full-time or temporary roles. However, temporary roles may only last between three months and one year. First Republic employees have not submitted any roles to receive benefits for 60 days, one-time payments, and benefit coverage.
JPMorgan expects a “hard landing” for the UK economy
Alan Monks, an economist at JPMorgan, warned of economic contraction in the United Kingdom due to the continuous increase in interest rates. Monks believes that the Bank of England (BoE) could peak interest rates at 5.75% or continue to increase up to 7% “under some scenarios”.
According to Monks, there are many reasons for the Bank of England to keep interest rates increasing. Monks said that high inflation could cause a “continuous spiral of wage prices,” spurring continued rate hikes. The analyst also believes that an increase in short-term expectations to halt inflation may end in higher increases even if long-term measures remain stable. Monks warns that these events may force the central bank to raise interest rates higher than JPMorgan forecasts.
Comments from BoE Governor Andre Bailey acknowledge that high inflation and the interest rates used to tackle the hike are factors that are negatively affecting people. However, Bailey emphasized that the Bank of England’s priority is to reduce inflation.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.
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