JPMorgan Chase saw second-quarter earnings surge 32 per cent, while Wells Fargo profit was up 20 per cent, a sign of relative health in the U.S. banking industry.

JPMorgan Chase, the biggest U.S. bank, had profits of $6.1 billion US after stripping out payments to preferred shareholders, up 32 per cent from $4.6 billion in the same period a year ago. The earnings were equivalent to $1.60 per share, beating analysts expectatons of $1.44 per share.

Wells Fargo, the fourth largest bank by assets, had second quarter net income of $5.27 billion US, up 20 per cent from $4.4 billion a year ago. On a per-share basis, earnings were 98 cents, beating the 93 cents forecast by Wall Street.

Wells Fargo is a big player in the U.S. mortgage market, and scooped up struggling Wachovia in 2008, during the financial crisis.

Mortgage market

It has been successful in reducing bad loans, despite the slow recovery of the U.S. housing market. Its credit losses were cut in half to $1.2 billion and its allowance for credit losses fell to $16.6 billion as of June 30 from $17.2 billion on March 31.

The bank also reduced expenses by $142 million to about $12.2 billion, mainly through lower employee benefits.

Wells Fargo stock closed up 74 cents at $42.63.

JPMorgan Chase is its main competitor in mortgage lending, which would be threatened by any rise in interest rates.

CEO Jamie Dimon said loan growth remains "soft" as both business and consumers are wary of taking on more debt.  

"However, we continue to see broad-based signs that the U.S economy is improving," Dimon said. "We are hopeful that as jobs are added and confidence builds, the U.S. economy will strengthen over time."  

JP Morgan bad trade

The No. 1 U.S. bank saw its profits from investment banking rise 19 per cent to $2.8 billion, driven by higher fees for underwriting debt and stock offerings as financial markets revived.

Revenue in the period grew by 14 per cent to $25.2 billion, above the $24.9 billion forecast by analysts. It's stock fell 17 cents today to $54.97.

JPMorgan earnings were hit a year ago after a huge loss on questionable proprietary trading. The loss ended up costing the bank more than $6 billion and drew sanctions from federal regulators. Dimon was forced to appear twice before congress to explain the trade.