JPMorgan Chase and Wells Fargo rise after jump in second-quarter profits

Investing.com -- Shares in JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) moved higher in early U.S. trading on Friday, as higher rates boosted earnings at some of the country's biggest lenders.

Both of these companies reported a sharp uptick in net income during the second quarter. JPMorgan, the largest U.S. lender, posted a 67% surge in the figure to $14.47 billion, topping estimates. Profit at California-based Wells Fargo also grew by 57% to almost $5B.

Recent interest rate hikes by the Federal Reserve have led banks to increase the amount they receive from lending, supporting returns. However, the longevity of this trend remains uncertain as pressure mounts on banks to give customers improved rates on their deposits.

The results were also being scrutinized for signs of how well bank balance sheets are holding up following ructions in the financial services industry earlier this year.

Investors were particularly curious to see how JPMorgan was impacted by its purchase of a majority of collapsed peer First Republic Bank in May -- a government-backed deal designed to bolster stability during the banking crisis. The move boosted the company's net interest income, the difference between how much a bank makes from loans and securities, and pays out for liabilities like deposits, to a record $21.9 billion.

Meanwhile, Citigroup (NYSE: C), the other large bank reporting today, saw its profits decrease by over a third to $2.9B. The New York-based firm was hit by a downturn in dealmaking activity that weighed on its investment banking division and offset resilience at its personal banking unit. Shares in Citigroup were lower as of 10:03 EST.

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