JPMorgan profits jump, but interest rates remain a threat

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It reported on Friday that JPMorgan Chase, the largest lender in the United States, reported profits of $14.5 billion in the most recent quarter, a big jump from the same period last year. The bank has been helped by growth in almost all areas, including increases in lending and credit card transactions, as well as relative stability in investment banking. JPMorgan shares rose more than 2 percent.

It was another quarter of outstanding financial results, and a reminder that the rich tend to get rich in banking.

Because of its size, JPMorgan is a proxy for the banking industry in general. Jamie Dimon, the bank’s chief executive, has deep political connections and his speculations about the economy are scrutinized in some circles as closely as central bank musings.

On Friday, in a statement, Mr. Dimon said the US economy was “resilient,” echoing language he has used repeatedly this year, but listed a range of risks, including that consumers are burning through their cash stores and that inflation remains high.

And there were two interesting side notes in the bank’s recent results: Total deposits fell slightly, an indication that consumers are moving their money elsewhere in an era when higher interest rates have made it easier to find higher-paying investments than checking accounts. Separately, but also on interest rates, JPMorgan last quarter lost $900 million on investments in US Treasurys and mortgage-backed securities, which fell in value as interest rates rose — but that was hardly an impact on its results.

JPMorgan and Mr. Dimon have both made the news this year, thanks to their prominent role as stabilization attempts during the spring banking crisis that brought down three smaller lenders. JPMorgan bought one of those failing banks, the First Republic. In a sign of just how upset that institution has become, JPMorgan said on Friday it has set aside $1.2 billion to deal with losses in the First Republic’s lending portfolio.

Analysts still expect the acquisition to eventually prove worthwhile, thanks to First Republic’s client base of wealthy clients and coastal affiliates, which Friday’s results show are already supporting JPMorgan’s asset and wealth management arms.

The next week or so will see a slew of other banks reporting their quarterly earnings. Among the most closely watched results are Wednesday’s results from Goldman Sachs, which has publicly hinted at a disappointing stretch, and regional banks like Western Alliance and Comerica, which are looking to prove they’ve recovered from their recent troubles.