The message from Wall Street so far this earnings season seems to be the US economy and the consumer are doing all right.
Jamie Dimon, head of JPMorgan Chase (JPM:NYSE) and someone who has warned of investors being complacent about the market and the risks to the economy, even admitted things were better than predicted as the global bank comfortably beat second-quarter earnings estimates.
‘We’ve basically been in this soft landing now for some time period,’ said Dimon, adding: ‘It’s been resilient. Hopefully that will continue.’
Spending at JPMorgan’s credit card business rose 7% during the second quarter, while at Citigroup (C:NYSE) spending rose by 4% over the period and customers increased their outstanding balances, increasing the bank’s revenue.
‘The consumer basically seems to be fine,’ added JPMorgan’s chief financial officer Jeremy Barnum.
Card issuer and Visa (V:NYSE) rival American Express (AXP:NYSE) also posted strong second-quarter earnings thanks to resilient spending by its more affluent customers.
Total revenue rose 9% to $17.9 billion, topping the $17.7 billion consensus, while earnings per share of $4.08 were also above the $3.89 forecast by analysts, although the company did increase its provision for loan losses slightly to $1.4 billion from $1.3 billion a year ago.
While it may not present a picture of the whole economy, due to its focus on high-end cardholders, AmEx does give some insight into how more credit-worthy customers are behaving.
Visa, which has beaten estimates for the last four quarters in a row, is expected to post an 18% increase in earnings per share to $2.86 from $2.42 a year ago when it reports its third-quarter results on 29 July.
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