NEW YORK: JPMorgan Chase said Thursday it is too soon to know if it will shift its European headquarters out from London after Britain's break with the EU, as it reported solid second-quarter earnings.
The June 23 vote by Britain to leave the European Union gave the bank a slight boost to trading revenues as global markets churned at the unexpected outcome, executives said.
But chief financial officer Marianne Lake said "it's very early days" as far as knowing how Brexit will affect the bank's operations in Europe.
"We would like to believe that we can continue to have our European franchise headquarters in London and London would be a strong financial center. But there's a long time before we'll have certainty about what the outcomes are."
Lake declined to comment on any talks with other European capitals that may be contending to replace London as the bank's European base.
"At this stage, we see this as a political and economic challenge that will take time to resolve, but not a financial crisis, and the impact on global growth and the US economy should be small," she said.
Earnings for the quarter ending June 30 were $6.2 billion, down 1.4 percent from the same period last year.
Revenues rose 2.7 percent to $25.2 billion.
Executives pointed to growth in several key areas including consumer deposits, credit card sales, merchant processing volume and core and total loans.
The results were consistent with a US economy that continues to grow at a slow and steady pace, executives said.
The bank's corporate and investment bank division reported a robust 35 percent gain in volatile fixed income trading, which helped to offset lower fees in equity underwriting.
Part of the gain was due to a spike in activity at the end of the quarter, although bank executives said volumes had grown at double-digit levels prior to the Brexit decision.
On the downside, the bank set aside $1.4 billion for credit losses, up nearly 50 percent from last year, due in part to a surge in credit card business.
Lake said overall credit quality in the US remains strong.
The bank also upped its reserves for bad energy sector loans driven by a single oil and gas company.
Lake said overall performance in the oil and gas sector had improved as oil prices have stabilized, but that some individual companies are still struggling. Future reserves in this category will be "very name-specific and idiosyncratic."
The earnings translated into $1.55 per share, 12 cents above expectations.
Shares of JPMorgan gained 2.1 percent to $64.50 in opening trade.
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