JPMorgan Chase reported $8.3 billion in net income, up from $7.0 billion a year ago but down from $8.7 billion in the first quarter of this year. The bank’s net revenue for the quarter was $28.4 billion, up six percent over the year, with net interest income at $13.6 billion, up 9 percent, while net noninterest income was $14.7 billion, up 4 percent.
Home lending net revenue rose 6 percent to $1.3 billion, “driven by production margin compression and lower net servicing revenue,” according to the bank’s statement.
Mortgage origination volume totaled $23.7 billion for the second quarter, compared to $20.0 billion in the first quarter and $26.2 billion in the second quarter of last year.
JPMorgan Chase CEO Jamie Dimon reflected positively on the economy, in a statement saying, “The healthy U.S. consumer drove double digit growth in client investment assets, card sales, and merchant processing volumes.”
However, the bank’s CFO, Marianne Lake, said during the earnings release that there is more competition in the mortgage and commercial real estate markets.
The earnings release for Wells Fargo was much less positive, prompting some negative reaction in the market.
Wells Fargo posted $5.2 billion in earnings in the second quarter, down from $5.9 billion a year ago and up slightly from $5.1 billion in the first quarter of the year. Revenue was reported at $21.6 billion, compared to $22.2 billion a year ago. Wells Fargo’s net interest income was $12.5 billion, up 1 percent; and net noninterest income was $9.0 billion, down 8 percent.
Wells Fargo posted declines in auto loans, its junior lien mortgage portfolio, and revolving credit and installment loans.
Overall, Wells Fargo reported a $3.0 billion drop in its loan segment, with declines in lower auto loans, legacy consumer real estate, and commercial real estate loans. Growth in commercial and industrial loans was offset by the fall in commercial real estate loans.
Consumer loans were down $2.8 billion “as growth in nonconforming mortgage loans and credit card loans was more than offset by declines in auto and legacy consumer real estate loans due to run-off, sales, and credit discipline,” Wells Fargo reported.
One-to-four family first mortgages were a bright spot for the bank with an increase of $343 million. The bank also reported $1.3 billion of sales of PCI, Pick-a-Pay mortgage loans.
While CEO Tim Sloan said the bank “continued to transform Wells Fargo into a better, stronger company” during the second quarter, the results were not met with optimism.
Octavio Marenzi, CEO of Opimas, a capital markets management consulting firm reportedly told CNBC, “The broad-based weakness of Wells Fargo’s results is troubling, with many indicators such as deposits, commercial and consumer lending trending down.” He pointed out that previous scandals, such as the revelation two years ago that retail bank employees were creating fake accounts under customers’ names, are “taking their toll.”
“Compared to JPMorgan’s excellent results earlier today, Wells Fargo is looking rather hapless, unable to get it right,” he continued.
Wells Fargo shares landed 1.2 percent down after the earnings call Friday.