10-Q: JPMorgan Q2 Earnings Dip 17% on Visa Gain Absence

JPMorgan Chase & Co. reported a 17% decline in second-quarter net income to $15.0 billion, primarily due to the absence of a significant one-time gain from Visa shares in the prior year.

Summary

• Net income for Q2 2025 was $14.987 billion, down 17% from $18.149 billion in Q2 2024.
• Diluted earnings per share (EPS) for Q2 2025 was $5.24, a 14% decrease from $6.12 in Q2 2024.
• Total net revenue for Q2 2025 was $44.912 billion, down 11% from $50.200 billion in Q2 2024, largely due to the absence of a $7.9 billion net gain related to Visa shares in the prior year.
• Excluding the Visa gain, noninterest revenue would have been up 11% in Q2 2025.
• Net interest income (NII) increased by 2% to $23.209 billion in Q2 2025, driven by higher Markets NII, wholesale deposit balances, and revolving balances in Card Services.
• Total noninterest expense was flat at $23.779 billion in Q2 2025, but would have been higher excluding a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in Q2 2024.
• The provision for credit losses decreased by 7% to $2.849 billion in Q2 2025, but net charge-offs increased by $179 million to $2.410 billion, predominantly in Card Services.
• Nonperforming assets totaled $10.480 billion at June 30, 2025, up 24% from December 31, 2024, driven by higher wholesale nonaccrual loans and consumer nonaccrual loans due to California wildfires.
• Firmwide average loans increased by 5% to $1.4 trillion, and average deposits increased by 6% to $2.5 trillion.
• Tangible book value per share (TBVPS) grew 11% to $103.40 at June 30, 2025.
• The Common Equity Tier 1 (CET1) capital ratio was 15.1% and the Supplementary Leverage Ratio (SLR) was 5.9% at June 30, 2025.
• The firm provided approximately $1.7 trillion in new and renewed credit and capital for wholesale and consumer clients during the first six months of 2025.

Sentiment

Score: 6

Explanation: While headline net income and EPS are down due to the absence of a prior-year one-time gain, underlying business performance shows resilience with strong NII growth (excluding Markets), robust investment banking and markets revenue, and significant AUM growth. The increase in nonperforming assets and charge-offs is a concern, but the firm's capital position remains strong, and the new share repurchase program and dividend increase signal confidence. The overall sentiment is cautiously positive, acknowledging the one-time impact on reported earnings while highlighting underlying operational strength and capital management.

Positives

• Net interest income (NII) increased by 2% in Q2 2025 and 1% YTD, driven by higher Markets net interest income, higher wholesale deposit balances, and higher revolving balances in Card Services.
• Excluding the prior year's $7.9 billion net gain related to Visa shares, noninterest revenue would have been up 11% in Q2 2025, reflecting higher Markets noninterest revenue, lower net investment securities losses, and increases in asset management fees, auto operating lease income, investment banking fees, and Payments fees.
• Investment Banking fees increased by 7% in Q2 2025 and 9% YTD, with the firm maintaining its #1 ranking for Global Investment Banking fees with an 8.9% wallet share YTD.
• Markets revenue increased by 15% in Q2 2025 and 18% YTD, driven by strong performance in Fixed Income Markets and Equity Markets.
• Asset & Wealth Management (AWM) reported a 10% increase in net revenue and a 17% increase in net income in Q2 2025, with Assets Under Management (AUM) up 18% to $4.3 trillion and client assets up 19% to $6.4 trillion, driven by continued net inflows and higher market levels.
• Consumer & Community Banking (CCB) net income increased by 23% in Q2 2025, reflecting higher Card Services NII and increased auto operating lease income.
• Tangible Book Value Per Share (TBVPS) grew 11% to $103.40 at June 30, 2025.
• The firm provided significant credit and capital, totaling approximately $1.7 trillion in the first six months of 2025.
• A $774 million income tax benefit was recognized in Corporate due to the resolution of certain tax audits and the impact of tax regulations related to foreign currency translation gains and losses.
• The Board of Directors announced an intention to increase the quarterly common stock dividend to $1.50 per share for Q3 2025 and authorized a new $50 billion common share repurchase program effective July 1, 2025.
• The preliminary Stress Capital Buffer (SCB) requirement provided by the Federal Reserve is 2.5% (down from 3.3%), leading to a lower Standardized CET1 capital ratio requirement of 11.5% (down from 12.3%).

Negatives

• Net income decreased by 17% in Q2 2025 and 6% YTD, primarily due to the absence of a $7.9 billion net gain related to Visa shares recorded in Q2 2024.
• Diluted earnings per share decreased by 14% in Q2 2025 and 2% YTD.
• Return on Common Equity (ROE) declined to 18% in Q2 2025 (from 23% in Q2 2024) and Return on Tangible Common Equity (ROTCE) declined to 21% (from 28% in Q2 2024).
• Nonperforming assets increased by 24% to $10.5 billion at June 30, 2025, driven by higher wholesale nonaccrual loans (Technology, Media & Telecommunications, Utilities, and Real Estate) and higher consumer nonaccrual loans (California wildfires).
• Net charge-offs increased by $179 million in Q2 2025 and $555 million YTD, predominantly in Card Services.
• The provision for credit losses increased by 25% YTD to $6.154 billion.
• Net interest income excluding Markets decreased by 1% in Q2 2025 and YTD, reflecting the impact of lower rates and deposit margin compression.
• Home Lending loans declined due to loan sales and paydowns outpacing originations.
• Average deposits in Consumer & Community Banking decreased due to increased customer spending and migration into higher-yielding investments.
• The Corporate segment's net income significantly decreased by 75% in Q2 2025 and 55% YTD, largely due to the absence of the Visa gain and First Republic-related items from the prior year.
• The firm experienced increased wholesale nonaccrual loans related to certain exposures in Technology, Media & Telecommunications, Utilities, and Real Estate.

Risks

• Credit risk is increasing, as evidenced by a 24% rise in nonperforming assets to $10.5 billion, particularly in wholesale (Technology, Media & Telecommunications, Utilities, Real Estate) and consumer (California wildfires).
• Net charge-offs are up, predominantly in Card Services, indicating a normalization or slight deterioration in credit quality.
• The allowance for credit losses is sensitive to macroeconomic forecasts; adverse scenarios incorporate a weighted average U.S. unemployment rate peaking at 5.9% in Q2 2026 and a U.S. real GDP level 2.0% lower than the central case by Q4 2026.
• Interest rate risk poses a potential impact on net interest income, with actual deposit rates paid potentially differing from modeled assumptions due to customer behavior and competition.
• Market risk models (Value-at-Risk) are inherently imprecise and limited, especially during sudden or severe market shifts, potentially leading to unexpected losses.
• Ongoing geopolitical uncertainties and hostilities are factors that could affect the firm's performance.
• Changes in laws, rules, and regulatory requirements, including capital and liquidity requirements (e.g., Enhanced SLR Proposal, SCB Proposal), could impact the firm's businesses and capital structure.
• The firm is involved in numerous evolving legal proceedings, including 1MDB, Amrapali, Foreign Exchange, Interchange, LIBOR, and Russian litigation, which could result in significant losses in excess of established reserves.
• Russian courts have disregarded contractual agreements and sanctions laws, entering judgments against the firm and ordering interim freezes of assets, posing a risk of asset seizure and inability to comply with obligations.
• Operational risk includes the ability to maintain the security of financial, accounting, technology, data processing, and other operational systems and facilities, and to withstand disruptions from system failures or cyber attacks.
• Damage to the firm's reputation could arise from various factors, including legal proceedings or failure to address social/environmental concerns.
• Liquidity risk exists if the firm is unable to meet its cash and collateral needs or maintain appropriate funding, although current capacity is deemed sufficient.
• Imprecision in estimating unobservable market inputs or other factors can affect fair value measurements, particularly for Level 3 instruments, impacting reported gains or losses.

Future Outlook

Management expects full-year 2025 net interest income to be approximately $95.5 billion and net interest income excluding Markets to be approximately $92.0 billion, both market dependent. Adjusted expense is anticipated to be approximately $95.5 billion, also market dependent. The net charge-off rate in Card Services is projected to be approximately 3.60%.

Management Comments

• JPMorganChase reported net income of $15.0 billion, down 17%, with earnings per share of $5.24, ROE of 18% and ROTCE of 21%.
• The Firm's results included a $774 million income tax benefit in Corporate.
• Total net revenue was $44.9 billion, down 11%, reflecting: Net interest income ('NII') was $23.2 billion, up 2%... Noninterest revenue ('NIR') was $21.7 billion, down 21%, primarily reflecting the absence of the $7.9 billion net gain related to Visa shares recorded in the prior year. Excluding this net gain, NIR would have been up 11%...
• Noninterest expense was $23.8 billion, flat when compared with the prior year, driven by higher compensation expense... offset by the absence of the $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation recorded in the prior year, as well as lower legal expense.
• The provision for credit losses was $2.8 billion. Net charge-offs of $2.4 billion, predominantly in Card Services, were up $179 million. The net addition to the allowance for credit losses of $439 million, primarily in wholesale, was driven by the impact of net lending activity, largely offset by the impact of changes in the Firms weighted-average macroeconomic outlook, including a decrease in the weight placed on the adverse scenarios.
• The Firm's nonperforming assets totaled $10.5 billion at June 30, 2025, up 24%, driven by: higher wholesale nonaccrual loans... and higher consumer nonaccrual loans, predominantly due to the impact of the wildfires in California in January 2025...
• Firmwide average loans of $1.4 trillion were up 5%, predominantly driven by higher loans in CIB and AWM.
• Firmwide average deposits of $2.5 trillion were up 6%...
• The Firm continues to support consumers, businesses and communities around the globe. The Firm provided new and renewed credit and raised capital for wholesale and consumer clients during the first six months of 2025, consisting of approximately: $1.7 trillion Total credit provided and capital raised (including loans and commitments).
• Management expects net interest income to be approximately $95.5 billion and net interest income excluding Markets to be approximately $92.0 billion, market dependent.
• Management expects adjusted expense to be approximately $95.5 billion, market dependent.
• Management expects the net charge-off rate in Card Services to be approximately 3.60%.

Industry Context

The filing indicates a mixed operating environment for large financial institutions. While net interest income growth is moderating due to lower rates and deposit margin compression, the firm's diversified business model, particularly strong performance in investment banking and markets, helps to mitigate these headwinds. The increase in nonperforming assets and net charge-offs, especially in wholesale and consumer credit, suggests a broader industry trend of normalizing or slightly deteriorating credit quality as macroeconomic conditions evolve. The continued growth in assets under management and client assets highlights the resilience of wealth management businesses in favorable market conditions. Regulatory developments, such as the proposed changes to the enhanced Supplementary Leverage Ratio (eSLR) and Stress Capital Buffer (SCB), are significant for Global Systemically Important Banks (GSIBs), potentially influencing capital requirements and strategic flexibility across the sector.

Comparison to Industry Standards

• JPMorgan Chase maintained its #1 ranking for Global Investment Banking fees with an 8.9% wallet share YTD, demonstrating strong competitive performance against major peers like Goldman Sachs, Morgan Stanley, Bank of America, and Citi.
• The preliminary Stress Capital Buffer (SCB) requirement for JPMorgan Chase decreased to 2.5% (from 3.3%), resulting in a lower Standardized CET1 capital ratio requirement of 11.5% (from 12.3%). This positions the firm favorably compared to other GSIBs, as a lower SCB implies less capital needs to be held against stress losses, potentially freeing up capital for buybacks or lending, unlike some peers who might face higher or stable SCB requirements.
• The increase in nonperforming assets (up 24%) and net charge-offs (up 8% in Q2) in sectors like Technology, Media & Telecommunications, Utilities, Real Estate, and Card Services, aligns with a broader industry trend of normalizing or deteriorating credit quality from historically low levels. Major banks with significant wholesale and consumer lending portfolios, such as Wells Fargo, Bank of America, and Citigroup, have also reported similar increases in credit loss provisions and charge-offs in recent quarters.
• While JPMorgan Chase's firmwide average deposits were up 6%, the decrease in Consumer & Community Banking deposits due to customer migration to higher-yielding investments is a common challenge faced by large banks in a high-rate environment, as customers seek better returns outside traditional checking/savings accounts. Competitors like Bank of America and Wells Fargo have reported similar deposit shifts.
• JPMorgan Chase's Return on Common Equity (ROE) of 18% and Return on Tangible Common Equity (ROTCE) of 21% remain strong, though the decline from prior year (23% and 28% respectively) reflects the impact of the absence of one-time gains and increased credit provisions, a trend that has affected many large banks as the post-pandemic boom subsides.

Management Changes

Corporate Governance

Legal Proceedings

• 1MDB Litigation: J.P. Morgan (Suisse) SA is a defendant in a civil litigation in Malaysia for alleged dishonest assistance related to $800 million in payments; Malaysian court upheld firm's jurisdiction challenge, but 1MDB appealed. Swiss OAG is conducting an investigation into possible criminal liability.
• Amrapali: India's Enforcement Directorate (ED) fined J.P. Morgan India Private Limited approximately $31.5 million in connection with investments in residential housing projects, which the firm is appealing. The Supreme Court of India ordered further inquiry into criminal currency control and money laundering provisions.
• Foreign Exchange Investigations and Litigation: A South Africa Competition Commission matter is pending. Civil litigation continues outside the U.S. (U.K., Israel, Netherlands, Brazil, Australia); settlements in principle reached in Israel and Australia are subject to court approval. The U.K. Court of Appeal overturned a class certification denial, which defendants appealed to the U.K. Supreme Court.
• Interchange Litigation: The District Court denied preliminary approval of a settlement for the injunctive class action. Individual actions by opted-out merchants continue, with a trial scheduled for April 2026 in the United States District Court for the Southern District of New York.
• LIBOR and Other Benchmark Rate Investigations and Litigation: The European General Court annulled and then re-imposed a fine related to EURIBOR, which the firm appealed. Class certification was granted for antitrust claims related to U.S. dollar LIBOR bonds and interest rate swaps. A lawsuit by individual plaintiffs asserting antitrust claims related to consumer loans and credit cards was dismissed and affirmed on appeal, with the Supreme Court denying certiorari.
• Russian Litigation: The firm faces actual and threatened litigation in Russia seeking payments that cannot be made due to sanctions laws. Russian courts have disregarded contractual agreements and sanctions, entering judgments (including one for $439 million) and executing against onshore assets. Russian courts have also ordered interim freezes of firm assets and allowed plaintiffs to withhold client dividends, which the firm is opposing.
• Shareholder Litigation: A shareholder derivative action is pending in the United States District Court for the Eastern District of New York against the firm, its Board of Directors, and certain current and former officers related to historical trading practices in the precious metals and U.S. treasuries markets.

Related Party Transactions

• The firm's employee share-based incentive plans involve the issuance of restricted stock units (RSUs), performance share units (PSUs), and stock appreciation rights (SARs) to employees, which are considered participating securities for EPS calculation.
• The firm made a $1.0 billion contribution of Visa shares to the JPMorgan Chase Foundation in the second quarter of 2024, which impacted noninterest expense.

Stakeholder Impact

• Shareholders: Impacted by decreased net income and EPS (though explained by one-time items), strong capital management (share repurchases, dividend increase), and ongoing litigation risks.
• Employees: Higher compensation expense due to growth in employee numbers (primarily front office and technology) and revenue-related compensation. Senior executive leadership changes were announced.
• Customers/Clients: Benefited from approximately $1.7 trillion in new and renewed credit and capital raised. Experienced deposit migration into higher-yielding investments, indicating sensitivity to market rates. Increased nonperforming loans in certain sectors may affect client relationships.
• Regulatory Authorities: Ongoing engagement with regulators on capital requirements (eSLR, SCB proposals) and compliance with international sanctions laws (e.g., Russia).
• Creditors: The firm's strong capital ratios and liquidity position provide comfort regarding its ability to meet obligations, despite ongoing litigation risks.

Next Steps

• The Federal Reserve is expected to provide the final Stress Capital Buffer (SCB) requirement by August 31, 2025.
• The final SCB requirement will become effective on October 1, 2025, based on current rules.
• An appeals court is scheduled to hear appeals in the 1MDB litigation in November 2025.
• A trial of claims brought by several merchants in the Interchange Litigation is scheduled to begin in April 2026.
• The U.K.'s implementation of the final Basel III standards is intended to be delayed until January 1, 2027.

Key Dates

Recommendation

The filing presents a mixed financial picture. While headline net income and EPS are down significantly, this is primarily due to the absence of a substantial one-time gain from Visa shares in the prior year, rather than a fundamental deterioration of core operations. Underlying business segments like Investment Banking and Markets show strong revenue growth, and Asset & Wealth Management continues to see robust inflows. The firm's capital position remains strong, and the announced $50 billion share repurchase program and increased dividend signal management's confidence and commitment to shareholder returns. However, the notable increase in nonperforming assets and net charge-offs, particularly in wholesale and consumer credit, indicates a normalization of credit quality and potential headwinds from a challenging macroeconomic environment. Ongoing significant legal proceedings also present a persistent, albeit managed, risk. Given these offsetting factors, a 'Hold' recommendation is appropriate. Investors should monitor credit quality trends and the impact of regulatory changes, but the core business remains robust.

Keywords

JPMorgan Chase, Financial Results, Banking, Investment Banking, Asset Management, Credit Quality, Net Interest Income, Earnings Per Share, Capital Ratios, Risk Management, SEC Filing, 10-Q, Share Repurchase, Dividend, Litigation, Macroeconomic Outlook, Nonperforming Assets, Market Risk, Liquidity, Corporate Governance