Consumer Loans Boost Citigroup, J.P. Morgan Profits

Citigroup Inc. and J.P. Morgan Chase & Co. said lending to consumers for home equity loans and mortgages drove up second-quarter profits.

Citigroup, the world’s largest financial services company, said net income rose 15% to $4.08 billion from the same quarter last year. J.P. Morgan, the top arranger of loans to U.S. companies, said profit more than doubled to $1.03 billion from a year earlier, when its earnings were depressed by venture capital losses.

The U.S. economy is helping bolster commercial banks’ profits as consumers increase spending through credit cards and take advantage of low interest rates to seek new home financing. A stock market slump cut investment banking revenue at J.P. Morgan by 35% and reduced profit growth at Citigroup’s Salomon Smith Barney Inc. unit to 4%.

J.P. Morgan shares dropped 36 cents to a four-year low of $28.14 on the New York Stock Exchange after Chief Financial Officer Dina Dublon said consumer banking revenue may have peaked in the second quarter.

Citigroup shares rose 73 cents to $36.93, also on the NYSE.

Citigroup second-quarter net income rose to 78 cents a share from 70 cents in the same quarter a year earlier.

Profit from Citigroup’s credit card unit, the world’s largest with 108 million accounts in 47 countries, rose 34% to $744 million.

Citibank branch profit increased 26% to $748 million. Consumer finance earnings, including home equity lending, rose 15% to $565 million.

J.P. Morgan’s net income rose to 50 cents a share from 18 cents a year earlier, the first profit growth in two years. Earnings from mortgage, auto lending and credit-card businesses and 530 branches rose 60% to $686 million.

Credit-card revenue increased 24% to $529 million as the bank signed on almost 900,000 new accounts. J.P. Morgan had $49.5 billion of credit-card loans at the end of the quarter, up 29% from a year earlier.

Profit from mortgage lending was $268 million, more than double that of a year earlier.

The unit benefited from rising home purchases and improving margins.

J.P. Morgan’s profit fell short of analysts’ expectations on a slump in securities business revenue. Investment banking and corporate lending profit fell 38% to $485 million.