JPMorgan Q2 results: ‘I found the release very discouraging’

JPMorgan Chase & Co (NYSE: JPM) is down 3.0% on Thursday after the largest U.S. bank reported weaker-than-expected quarterly profit in the face of geopolitical tensions, inflationary pressures, and waning consumer confidence.

JPMorgan Q2 results: a brief recap

• Earned $8.65 billion in fiscal Q2 versus the year-ago figure of $11.95 billion
• Per-share earnings of $2.76 were significantly below last year’s $3.78
• Reported revenue at $30.72 billion was not even up 1.0% on a YoY basis
• FactSet consensus was for $2.89 of EPS on $31.81 billion in revenue
• Net interest income was up 19%, thanks to the rising interest rates
• Trading revenue saw a 15% increase on the back of increased volatility

Also on Thursday, JPMorgan terminated its stock repurchase programme temporarily to boost capital and meet street test requirements. Managed revenue in the recent financial quarter was up only marginally, as per the earnings press release.

Other notable figures and Cramer’s remarks

Other notable figures in JPMorgan Q2 results include ROTCE (return on tangible common equity) that hit 17% – in line with the bank’s previously laid out target.

Credit loss provisions of $1.10 billion included net charge-offs worth $657 million and a net reserve build of $428 million. Reacting to the earnings report on CNBC’s “Squawk Box”, Jim Cramer said:

It just confirms why this stock had a non-stop move down from $165 to here. I found the release very discouraging. [Jamie Dimon] again told us that we got to start really being worried about what’s going to happen with the economy. He confirmed the hurricane thesis. If JPMorgan sets the tone for this earnings season, we’ll have the decline we’ve been hearing about from some of the strategists.

The Bank of America now sees downside to as much as the 3,000 level in S&P 500 if indeed the U.S. economy slides into a recession. JPMorgan stock price is now down more than 35% for the year.