The big banks' second-quarter results are in, and they demonstrate incredible market momentum. There was strong growth across most of their businesses, indicating a healthy economy, but the big star was market activity. Investment banking divisions had a fantastic quarter, driven by initial public offerings (IPOs) and other offerings, but consumer banking and mergers and acquisitions had robust activity, too.
JPMorgan Chase (NYSE: JPM) is the largest bank in the U.S. by assets, and it had a blowout quarter. But it's what CEO Jamie Dimon said about the market now that every investor needs to hear.
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As good as it gets
"It's getting close to as good as it gets," Dimon answered on the second-quarter earnings call when asked by an analyst if this is as good as it gets. The analyst, Mathew O'Connor from Deutsche Bank, noted how JPMorgan Chase is firing on all cylinders across its business. Dimon followed that up by pragmatically noting that "We just don't know how long it's going to last.
"Could it get a lot better than this? It can get better," he added later, "But how much better, I don't know."
The second-quarter results were outstanding. Here are some highlights:
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Revenue increased 27% year over year.
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Net interest income was up 10%.
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Earnings per share were $7.70, up from $2.46 last year.
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Return on tangible common equity (ROTCE) was 29%, up from 21% last year and 23% in the first quarter.
The company's commercial and investment bank (CIB) division was the standout, benefiting from robust IPO activity, including Space Exploration Technologies, of which it was a co-underwriter. According to reports, it received a $75 million payout for its services.
Investment Banking revenue was up 45% over last year, and its Equity Markets group, which is its trading arm, was up 86%. Consumer banking, though, was also healthy, with an 8% increase in revenue and 2% increase in average loans.
The warning behind the message
The implications of Dimon's message are that the bull market doesn't seem to be ending yet, but that it's going to come to an end at some point.
If your portfolio is tailored to a strong bull economy, with a large portion in high-growth and artificial intelligence (AI) stocks, you might want to start diversifying into more protective stocks. You won't be able to predict when the market reaches a high, so you'll want to be prepared in advance. JPMorgan Chase is actually a great candidate itself.
At the same time, you don't want to miss potential gains in the market. If you're a conservative investor, consider adding some lower-risk growth stocks to your portfolio or growth-focused exchange-traded funds like the Vanguard Growth ETF (NYSEMKT: VUG), which helps reduce risk through diversification.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Vanguard Growth ETF. The Motley Fool has a disclosure policy.
9 Words From JPMorgan Chase's Jamie Dimon That Every Investor Needs to Hear Right Now. Hint: It Could Change Your Investment Strategy. was originally published by The Motley Fool
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