JPMorgan Tops Q2 Estimates but Stock Dips on 'Sell the News' Trade

JPMorgan Chase (JPM) delivered a solid set of second-quarter results, with earnings and revenue both beating expectations and strength seen across trading, investment banking, and consumer lending. But despite the positive print, shares are under mild pressure in early trading as investors opt to "sell the news" after a sharp run-up into the release. The stock had rallied strongly in the weeks leading up to earnings, setting a high bar that even a beat-and-raise quarter couldn’t clear. Management struck a cautiously optimistic tone, noting economic resilience but flagging persistent risks around fiscal deficits, geopolitics, and asset valuations.

The bank reported adjusted EPS of $4.96, topping consensus estimates of $4.47. Net income reached $15.0 billion, and total managed revenue came in at $45.7 billion, down 10% year over year but modestly ahead of Wall Street’s forecast. Return on equity (ROE) stood at 18%, with return on tangible common equity (ROTCE) at 21%, and the managed overhead ratio was 52%. CEO Jamie Dimon acknowledged U.S. economic resilience but warned of persistent risks including tariffs, geopolitical tensions, and elevated asset prices.

Net Interest Income (NII) came in at $23.3 billion, up 2% YoY, with NII excluding Markets at $22.8 billion, down 1%. The decline was driven by deposit margin compression due to lower rates, offset by higher wholesale deposit balances and revolving card balances. Average loans rose 5% YoY and 3% QoQ, while average deposits increased 6% YoY.

On the non-interest income side, Markets revenue totaled $8.9 billion, up 15% YoY. Fixed Income Markets revenue increased 14% to $5.7 billion, with strength in currencies, rates, and commodities. Equity Markets revenue rose 15% to $3.2 billion, led by gains in derivatives. Investment banking fees grew 7% YoY and 12% QoQ to $2.5 billion, driven by debt underwriting and advisory. Overall non-interest revenue fell 20% to $22.4 billion, but excluding a $7.9 billion Visa gain from the prior year, it rose 8%.

Consumer & Community Banking (CCB) posted net income of $5.2 billion, up 23%. Revenue rose 6% to $18.8 billion. Card Services & Auto revenue grew 15% due to higher revolving balances and leasing income. Mobile customers rose 8%, and card sales volume increased 7% YoY. Credit quality remained strong with charge-offs of $2.1 billion, while reserves stayed flat.

The Corporate & Investment Bank (CIB) generated $6.7 billion in net income, up 13%, on revenue of $19.5 billion. Fixed income and equity markets revenues were strong, with notable strength in Currencies and Derivatives. Securities Services added $1.4 billion in revenue, up 12%. Credit costs totaled $696 million, driven by a $371 million reserve build.

Asset & Wealth Management (AWM) reported strong fee income growth and net inflows of $80 billion. Client assets surpassed $6.4 trillion. Asset management fees rose 10%, and deposit trends remained healthy.

Corporate posted a $774 million tax benefit tied to audit resolutions and foreign currency tax regulations. NII in the segment benefited from internal transfer pricing. No significant gains or losses were reported.

Credit quality across the bank remained resilient. Total credit costs were $2.8 billion, including $2.4 billion in net charge-offs—up modestly from last year—and a $439 million reserve build. Most losses were concentrated in Card Services and C&I lending.

Capital and liquidity remained robust. The CET1 ratio stood at 15%, well above regulatory requirements. The bank returned $7 billion to shareholders through repurchases and raised its dividend again. Liquidity remained high, with $1.5 trillion in cash and marketable securities. Tangible book value per share also rose.

Expenses totaled $23.8 billion, flat YoY. Excluding a $1 billion charitable contribution in the prior year, expenses rose 5% due to compensation and tech spending. The reported overhead ratio was 53%.

JPMorgan raised full-year guidance for NII to $95.5 billion, up from $94.5 billion previously, and maintained expense guidance at $95.5 billion. The bank expects the Card Services NCO rate to remain steady at 3.6%. Management remains constructive but warned of risks from trade, inflation, and fiscal deficits.

The stock initially gained 1.8% premarket on the results but reversed lower, recently trading down 0.3%. Investors reacted favorably to strong Markets and credit trends, but muted top-line growth and macro caution capped enthusiasm. Overall, Q2 was a reaffirmation of JPM’s operational strength and adaptability in an uncertain environment.

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