JPMorgan Chase & Co JPM.N, the biggest U.S. bank by assets, said on Tuesday that second-quarter profit fell 8 percent after customer stock and bond trading volume dropped and mortgage lending fees plunged.
The results were not as bad as investors had feared, and the bank's shares rose 3.8 percent to $58.44 shortly after midday.
Chief Executive Jamie Dimon said the bank had seen "encouraging signs" across its businesses toward the end of the quarter, including businesses drawing more from credit lines. But the bank's executives also sounded notes of caution, noting that it was "too early to assume that this momentum will continue."
Speaking on a conference call with analysts, Dimon said that companies are still not stepping up capital spending. On a conference call with reporters, Chief Financial Officer Marianne Lake said the pickup in bond trading revenue that the bank saw in June has not continued through July.
The report is the bank's first since Dimon disclosed that he had throat cancer.
Dimon told reporters on Tuesday, "I feel great," and added that he would stay engaged with the business as he underwent treatment. He said for the first time that he was advised to take a few weeks of rest after his eight weeks of treatment.
The bank's net income fell to $5.99 billion, or $1.46 per share, from $6.5 billion, or $1.60 per share, in the same quarter of 2013. Revenue fell 3 percent to $24.45 billion.
Analysts on average had expected earnings of $1.29 per share, according to Thomson Reuters I/B/E/S.
Revenue from fixed-income and equity markets fell 15 percent to $3.5 billion in the quarter ended June 30 compared with the same quarter last year, but the drop was less than the 20 percent decline that JPMorgan had forecast in May.
Investors had broadly expected trading revenue drops in the 20-percent range for the big banks, but stronger activity in June helped dampen the declines that banks posted. Goldman Sachs Group Inc GS.N posted a 10 percent decline in stock and bond trading revenue for customers, excluding a business it sold last year.
Citigroup Inc C.N, which reported on Monday, said income from stock and bond trading fell 15 percent, excluding an accounting adjustment - well below the 20-25 percent fall it had braced the market for in May.
JPMorgan executives have said that institutional investors seem to be shying away from bonds because of a lack of strong opinions about future moves in interest rates and currencies.
MORTGAGE LENDING DROPS
JPMorgan, the second largest U.S. mortgage lender after Wells Fargo & Co WFC.N, said its profit from mortgage lending fell 38 percent to $709 million, while mortgage application volumes dropped 54 percent to $30.1 billion.
Overall U.S. mortgage demand has fallen for more than a year as mortgage rates have risen. Demand for loans was also hit by a weaker spring selling season compared with last year.
JPMorgan said total assets at end-June stood at $2.52 trillion, up from $2.48 trillion at the end of March.
(Reporting by David Henry and Tanya Agrawal; Editing by Ted Kerr and Phil Berlowitz)