JPMorgan Chase's mortgage banking revenue is up 5% for the second quarter on a year-over-year basis due to increased origination revenue even as the company produced 15% fewer loans.
For the period, the company reported $1.9 billion in total mortgage banking revenue, compared with $1.8 billion for the second quarter of 2015. The increased revenue was driven by portfolio growth and higher production revenue, the company's press release said, but lower mortgage servicing revenue offset the gains.
Chase originated $25 billion during the quarter, made up of retail volume of $11.2 billion and correspondent loan purchases of $13.8 billion. A year ago, there was total volume of $29.3 billion, with $9.8 billion from retail and $19.5 billion from correspondent.
The bank has been focused on mortgage production shifting to a purchase market so it has been building out its retail business. In turn that has reduced the share of correspondent originations, Chief Financial Officer Marianne Lake said during the conference call.
Net production revenue totaled $261 million, up 12% from $233 million one year prior, while net mortgage servicing revenue fell 22% to $428 million from $549 million.
Residential mortgages on its balance sheet grew by 28% year-over-year to $178.7 billion at the end of the second quarter from $139.8 billion on June 30, 2015.
Total mortgage loans serviced fell by 4% to $880 billion from $917 billion.
There was a question about Chase's residential mortgage securitization program during the conference call. "So we've done one and we're looking at more securitizations in the mortgage space and we are keeping a vertical stripe. We're retaining the loans on our balance sheet or the securities on our balance sheet, I should say."
"And in doing that we've been able to get private capital to take the majority of the lower credit risk and get better capital treatment for ourselves," Lake responded.
JPMorgan Chase had net income of $6.2 billion for the quarter, down 1% from the $6.3 billion recorded for the same period in 2015.