JP Morgan Q2 Results: Profit jumps 25% as bank cashed in holdings in Visa

JPMorgan Chase's profit rose 25% in the second quarter, buoyed by rising investment banking fees and an $8 billion accounting gain from a share exchange deal with Visa.

Investment banks have benefited from a resurgence in capital-raising activity both in debt and equities markets.

The bank cashed in billions of dollars of its holdings in Visa Inc. But its results were also helped by higher interest rates, as well as consumers who seemed to still want to spend, despite geopolitical and economic uncertainties.

The nation’s biggest bank by assets on Friday posted a profit of $18.15 billion, up 25% from a year earlier. On a per share basis, JPMorgan earned $6.12 per share, which beat analysts’ estimates.

A significant part of JPMorgan’s results was a $7.9 billion gain on its stake in Visa. The bank converted its ownership in the payment processing giant into common stock in the second quarter. The bank also donated $1 billion of Visa shares to JPMorgan’s philanthropic organization.

Without the gain, profit fell compared with the year-ago quarter.

Wall Street banks are also seeing an uptick in fee income from advising on M&A deals as companies become more confident on the U.S. economy's ability to avoid a major downturn.

"While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks," CEO Jamie Dimon said adding that the risks included a changing geopolitical situation, which remains the most dangerous since World War II.

The largest U.S. bank's profit was $18.15 billion, or $6.12 per share, for the three months ended June 30, compared with $14.47 billion, or $4.75 per share, a year earlier, it said on Friday.

The bank benefited from a plan to exchange some of its shares in Visa, the world's largest payment network.

Investment banking fees grew 50%, compared with a low base, but was higher than an earlier company prediction of 25% to 30%.

JPMorgan also extended its gains from lending, with net interest income (NII) - the difference between what it earns on loans and pays out on deposits - growing 4% to $22.9 billion versus a year earlier.

Lending has remained healthy even as banks compete for deposits and face pressure to shell out more to depositors to store their money.