By Sweta Singh and Richa Naidu
(Reuters) - JPMorgan Chase & Co
Like other banks, the biggest U.S. lender by assets has been under pressure to cut costs because low interest rates have weighed on revenue for far longer than expected.
At the same time, regulators have demanded that banks hold more capital and hire additional staff to control risks and comply with new regulations.
JPMorgan's non-interest expenses fell 6 percent to $14.50 billion in the quarter, helped by efforts to streamline its business as well as lower legal and mortgage banking expenses.
The bank paid an effective tax rate of 25 percent, down from 30 percent in the same quarter last year, as its tax bill dropped 13 percent to $2.81 billion.
That helped net income attributable to common shareholders rise to $5.78 billion, or $1.54 per share, from $5.57 billion, or $1.46 per share, a year earlier.
Analysts on average had expected earnings of $1.44 per share, according to Thomson Reuters I/B/E/S.
But net revenue fell 3.2 percent to $24.53 billion, largely due to a fall in revenue from mortgage banking and fixed-income trading.
"Their beat was mainly driven by a lower than expected tax rate, and if you held their tax rate constant, the quarter is not as good as it looks," FBR analyst Paul Miller said.
JPMorgan's shares were up 0.5 percent at $68.45 in early trading.
BOND MARKET DRAGS
Revenue from the bank's fixed-income business fell 21 percent to $2.93 billion. Adjusted for the sale of a physical commodities business and other changes, revenue from fixed-income trading would have fallen 10 percent.
Many banks are expected to report underwhelming bond trading results due to a downturn in bond trading markets in June.
Investor worries spanned the globe last quarter, ranging from the Greek debt crisis to concerns that the U.S. Federal Reserve would not be able to raise interest rates this year.
JPMorgan said its return on tangible common equity, a key measure of profit performance, was unchanged from a year earlier at 14 percent. The company's longer-term target is 15 percent.
The bank's net interest margin, an important ingredient of profitability that is being closely watched in this quarter's bank reports, fell to 2.09 percent from 2.19 percent. Net interest margin represents the difference between a bank's cost of funds and the yields received from loans and securities.
Total assets stood at $2.45 trillion at the end of June, compared with $2.58 trillion at the end of March.
JPMorgan, the second largest U.S. mortgage lender after Wells Fargo & Co
Wells Fargo reported a drop in quarterly profit for the second consecutive quarter as it set aside more money to cover bad loans and its expenses rose.
(Reporting by Sweta Singh and Richa Naidu in Bengaluru, David Henry in New York; Editing by Ted Kerr)
