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JPMorgan Chase (JPM -1%) is trading modestly lower following its Q2 earnings report this morning. The company reported a healthy beat on EPS. Also, revenue rose 22% yr/yr to $50.8 bln, which was better than expected. CEO Jamie Dimon was not on the call this morning due to an overseas travel conflict. As such, we did not get his macro view on the call. However, in the press release, he provided some color.

• JPM reported a consolidated provision for credit losses (PCL) of $3.05 bln, reflecting net charge-offs of $2.2 bln and a net reserve build of $821 mln. Net charge-offs were up $820 mln, predominantly driven by Card Services. The prior-year provision was $2.90 bln, reflecting a net reserve build of $1.5 bln, predominantly associated with First Republic, as well as net chargeoffs of $1.4 bln.
• In its Consumer & Community Banking (CCB) segment, revenue rose 3% yr/yr to $17.70 bln. Banking & Wealth Mgmt revenue was $10.4 bln, down 5%. Home Lending revenue jumped 31% yr/yr to $1.32 bln. Card Services & Auto revenue rose 14% to $6.01 bln, reflecting higher net interest income on higher revolving balances and higher card income on higher sales volume.
• In CCB, the company opened over 450K net new checking accounts. Client investment assets were up 14% to $1.0 trillion, and JPM had a record number of first-time investors. Additionally, Card loans were up 12% on continued robust customer acquisition of 2.4 mln. In the Commercial & Investment Bank (CIB) segment, revenue rose a healthy 9% yr/yr to $17.92 bln. Investment Banking revenue jumped 46% yr/yr to $2.5 bln, albeit off a low base last year. Asset & Wealth Mgmt segment revenue rose 6% yr/yr to $5.25 bn.
• In terms of the macro view, the company said market valuations and credit spreads seem to reflect a rather benign economic outlook. However, JPM continues to be vigilant about potential tail risks. Specifically, the geopolitical situation remains complex and potentially the most dangerous since World War II, although its outcome and effect on the global economy remain unknown.
• JPM noted there has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world. Therefore, the company believes inflation and interest rates may stay higher than the market expects. Also, the full effects of quantitative tightening on this scale are still not known.

Overall, we think the upside EPS/revenue results coupled with robust growth in investment banking and home lending, are being offset somewhat by a large increase in its PCL. The net reserve build of $821 mln was a bit surprising after a net reserve release of $72 mln in Q1. Despite JPM's generally positive comments, this build makes us think JPM also has some near term concerns about the economy. Wells Fargo (WFC -7%) and Citigroup (C -2.8%) are also lower on their earnings this morning. All these earnings reports make us a bit more nervous ahead of several other banks set to report early next week.