JPMorgan bank profit jumped a whopping 67% to $14.5 billion in the second quarter of 2023, driven by rising rates and its acquisition of collapsed First Republic Bank in May.

By comparison, Google and Apple saw 21% and 25% in profit. America’s financial crisis has been incredibly profitable for JP Morgan.

Q2 results surpass expectations

JPMorgan Chase reported a 67% profit margin for the second quarter of 2023 after acquiring the failed First Republic Bank (FRB) in May. JPMorgan’s stock surged during premarket trading on Friday.

According to the quarterly report, the bank’s Q2 profit hit $14.47 billion, or $4.75 per share, up from $8.65 billion, or $2.76 per share, in the same period last year. Earnings were higher expectations, notably due to the acquisition of FRB.

Year on year, JPMorgan’s revenue surged 34% year on year to $41.31 billion, exceeding Wall Street analyst predictions of $38.55 billion. Revenue in the bank’s consumer banking unit increased 37% year on year, while profit increased 71% to $5.31 billion, spurred by rising interest rates.

The commercial banking division, expected a boost from First Republic’s takeover, with revenue increasing 49% year-over-year. JPMorgan said that its Q2 profit and revenue would have climbed by 40% and 21%, even without the First Republic deal.  Regardless, First Republic added a net of $2.7 billion in income to JPMorgan in the quarter.

By comparison, Google and Apple saw 21% and 25% in profit. America’s financial crisis has been incredibly profitable for JPMorgan.

JPM’s takeover of First Republic

After winning the banking auction, JPMorgan acquired First Republic on May 1, 2023 amidst a cascading banking crisis in the United States on the back of rising interest rates. The giant paid $10.6 billion for the insolvent lender and said it would reopen all offices and branches.

The acquisition was a rescue operation, egged on by federal regulators which tend to rely on JPMorgan as the fail safe for US private banking. Naturally, the consolidation effect resulted in a surge of new clients in JPMorgan’s consumer and commercial units, adding an immediate $2.7 billion gain.

The First Republic failed amidst a US banking crisis, which is not over, according to legendary investor Stanley Druckenmiller. Silicon Valley Bank (SVB) and Signature Bank also collapsed amidst rising awareness that traditional banks effectively cannot ensure deposits.

Expectations of a recession have led various high profile investors to speculate that the banking crisis is far from over.

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