A robust demand for loans and higher interest rates that increased its net interest income fueled JPMorgan Chase's (JPM) second quarter earnings, despite including the financials of the ailing First Republic Bank it acquired in May. JPMorgan shares rose about⛎ 2% in early trading o🤡n Friday following the news.

Why Does This Matter?

While the Federal Reserve's campaign of interest rate hikes has made borrowing more expensive for consumers, it has helped the financials of banks such as JPMorgan.

The largest bank by assets in the U.S., JPMorgan saw a robust performance by i𒅌ts retail banking business in the second quarter. Net income for consumer banking jumped 71% compared to the same period last year to $5.3 billion. That number adjusts down to a still impressive 61% when accounting for First Republic financials.

Behind that growth was the surge in the bank's net interest income that at $21.9 billion, was a 44% increase over the same period last year. Adjusting for First Republic numbers, it still showed a 38% growth 澳洲幸运5官方开奖结果体彩网:year-over-year.

Debit and credit card sales increased 7%, while average loans across consumer and other business segments increased 13% for the quarter.

Jamie Dimon, chair and CEO of JPMorgan Chase, was positive about the resilience of the US economy. "Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly," he said.

However, Dimon cautioned abo🌳ut the risks ahead, including the stubborn inflation that is burning through consumer cash reserves and leading to quantitative tightening, as well as the continuing war in Ukraine.

Other Numbers

The financial institution beat market expectations by reporting an EPS of $4.75 on revenue of $41.3 billion in the second quarter of 2023. Analysts expected the bank to earn $3.97 per share on revenue of $38.97 billion for the reported period.

Exclu𒁃ding the First Republic transaction, at $14.5 billion, net income was up 40% compared to the same period las💛t year. Almost all business segments saw growth in the second quarter, with credit card loans up 18% and payment revenue in commercial banking growing by 79%. Though investment banking fees fell 6%, driven by lower advisory fees, the New York-based bank gained market share year-to-date.

JPM's shares have risen by about 13% compared to S&P 500's 18% since the start of the year. Fears of a possible recession may lead to a slowdown in loan demand that impacts the banking sector. Higher funding costs may also cause investors to shy away, though JPMorgan benefits from some flight-to-safety investment flows.