NEW YORK -- JPMorgan Chase, the nation's largest bank by assets, said Tuesday that its second-quarter earnings fell 9 percent as revenue at its investment banking and mortgage businesses dropped, and Goldman Sachs reported a surprise increase in second-quarter profit as fixed-income revenue fell less than many analysts projected.
JPMorgan's net income totaled $5.6 billion in the quarter after payments to preferred shareholders. That was down from net income of $6.1 billion in the same period last year.
Earnings amounted to $1.46 per share, compared with $1.60 a year earlier. They beat the forecasts of analysts polled by FactSet, who predicted earnings of $1.29 per share.
Revenue in the quarter fell 3 percent to $24.5 billion. Analysts had forecast $23.7 billion for the period.
The earnings are the first since JPMorgan CEO Jamie Dimon disclosed early this month that he was battling throat cancer. Dimon, 58, said he plans to remain on the job and be actively involved in key decisions while undergoing radiation and chemotherapy treatment.
Dimon told reporters on a conference call that JPMorgan's board would be continually briefed on his condition and would make any announcements if there were any material changes.
"I'm hoping the next time I talk about this at all, it will be in about eight weeks and I'll tell you [the treatment] is complete and the prognosis is still very good," Dimon said.
The bank's fixed income and stock trading revenue fell 14 percent to $4.65 billion from $5.37 billion in the same period a year ago. While that was a big drop, the bank said in a regulatory statement May 2 that it was expecting trading revenue to decline by about 20 percent in the period.
Dimon said the bank saw "encouraging signs" of a pickup in business across some of its units, including the markets division of investment banking.
"While it is too early to assume that this momentum will continue, we have confidence in the long-term growth of the economy," Dimon said in a statement that accompanied the earnings.
Mortgage applications fell 54 percent to $30.1 billion compared with a year earlier; however, that was an increase of 15 percent from the first quarter. An increase in bond yields since last summer has caused mortgage rates to rise, which, in turn, has slowed refinancing of home loans.
JPMorgan's stock rose $1.98, or 3.5 percent, to close Tuesday at $58.27.
Goldman Sach's net income climbed 5 percent to $2.04 billion, or $4.10 a share, from $1.93 billion, or $3.70, a year earlier, the New York-based company said Tuesday in a statement. That beat the $3.09 average estimate of 25 analysts in a Bloomberg survey.
Chief Executive Officer Lloyd C. Blankfein, 59, has pledged not to overreact to a trading slump that's now in its fifth year as he positions the firm to pick up market share from other banks that are pulling back. Blankfein is also relying on underwriting stocks and bonds, which accounted for 14 percent of revenue in the second quarter, the highest portion since 2000. First-half investment-banking fees climbed to a record.
"We've got a strong beat here, primarily revenue-driven, and Goldman is a little more resilient than expected," said Devin Ryan, an analyst at JMP Group Inc. in New York.
Revenue rose 6 percent to $9.13 billion. Compensation, the firm's biggest expense, climbed to $3.92 billion, or 43 percent of revenue, the same percentage as a year earlier.
Fixed-income, currency and commodity trading revenue was $2.22 billion. The firm has cut 10 percent of its fixed-income workforce since 2010 and reduced the risk-weighted assets in that business by $90 billion in the past two years. It has also relied on other businesses for growth.
Revenue from the equities division declined 11 percent from a year earlier to $1.63 billion, excluding accounting adjustments.
While the trading performance was better than expected, it still marked the lowest first-half revenue since the financial crisis in 2008. The bank earned a 10.9 percent return on equity in the quarter, a third of the level before the financial crisis.
Goldman Sach's shares rose $2.17, or 1.3 percent, to close Tuesday at 169.17.
Information for this article was contributed by Steve Rothwell of The Associated Press and Michael J. Moore of Bloomberg News.
Business on 07/16/2014