What happened
Shares of JPMorgan Chase (JPM 0.15%), the largest bank by assets in the U.S., were trading nearly 4.5% lower as of 11:37 a.m. ET Thursday after the company reported second-quarter results that disappointed investors.
So what
For the quarter, JPMorgan reported diluted earnings per share of $2.76 on total revenue of $30.7 billion, both numbers that missed analysts' consensus estimates.
The bank also suspended its share repurchase program so that it can build up capital to meet new regulatory capital requirements that it expects to have in 2023 and 2024.
Total loan balances grew by 3% from the first quarter of the year, and management is now expecting net interest income (NII) -- the profits banks make on loans, securities, and cash after funding those assets -- to come in at $58 billion for the year, excluding markets NII. Previously, the bank had been guiding for $56 billion of NII, but it revised its estimates upward due to higher projected interest rates. Credit quality remained very strong.
The corporate and investment business had its least profitable quarter in the last five quarters as investment banking revenue fell by more than $2 billion year over year. Its trading business remained strong, particularly in equity markets, thanks to strong performance in derivatives.
Now what
Combine an earnings miss with the suspension of share repurchases and you have an obvious recipe for an off day in the market, but I still think JPMorgan is well positioned based on its NII trends and loan growth, as well as the strong financial health of the U.S. consumer, at least for the time being.
The bank is trading at around 162% of its tangible book value. That's a historically low valuation for it looking back to 2017, which is why I like the stock right now.
