JPMorgan reports 13% rise in quarterly profit

People walk inside JP Morgan headquarters in New York on Oct 25, 2013.
People walk inside JP Morgan headquarters in New York on Oct 25, 2013. PHOTO: REUTERS

NEW YORK (REUTERS) - JPMorgan Chase & Co, the biggest US bank by assets, reported a 13.4 per cent increase in quarterly profit on Friday (July 14) as gains from higher interest rates more than offset a drop in bond trading.

The bank's net income rose to US$7.03 billion in the second quarter ended June 30 from US$6.20 billion a year earlier.

Earnings per share rose to US$1.82 from US$1.55. Analysts had expected earnings of US$1.58 per share, according to Thomson Reuters I/B/E/S.

Markets revenue fell 14 percent, led by a 19 per cent decrease in fixed income markets revenue to US$3.22 billion.

Mortgage lending continued to be a dark spot in the bank's results as higher interest rates kept borrowers from refinancing. Mortgage fees and loan servicing revenue fell about 41 per cent to US$404 million.

Net interest income rose 7.6 per cent to US$12.21 billion, primarily driven by loan growth and the higher rates.

Rising interest rates are usually good for banks, allowing them to increase how much they charge for loans faster than they increase how much they pay for deposits. JPMorgan's non-interest expenses rose to US$14.51 billion, up from US$13.64 billion a year earlier.

At the end of May, chief financial officer Marianne Lake had estimated expenses of less than US$14.5 billion in the quarter. JPMorgan's shares were little changed in premarket trading. They have risen 7.9 per cent in value this year, mirroring gains in the broader S&P 500 Financial Index.

About half of those gains have come after June 28 when the Federal Reserve approved JPMorgan's plan to spend as much as US$19.4 billion to buy back stock over the next year. The bank also won permission to increase its quarterly dividend. Wells Fargo & Co and Citigroup Inc are also scheduled to report results on Friday.