Includes quotes and details in paragraph 3-6,12,15,20,25

By Manya Saini and Nupur Anand

July 14 (Reuters) - JPMorgan Chase JPM.N reported a record second-quarter profit on Tuesday, as a wave of big-ticket IPOs and dealmaking helped drive investment banking fees to their highest levels since 2021, while its trading desk capitalized on volatile markets.

Revenue rose across all business units at the bank. Investment banking now run by recently promoted executive Doug Petno rode a sharp rebound in the U.S. IPO market, led by Elon Musk's SpaceX, which roared into the market with the largest listing in history. JPMorgan was among the lead underwriters on the deal.

"We're in a very healthy, active, exuberant market with very high prices and very high volumes, and we benefit from that," JPMorgan CEO Jamie Dimon said.

"We just don't know how long it will continue," he added.

CFO Jeremy Barnum said that the investment banking pipeline remains robust for now and the momentum is expected to continue.

"The current activity levels seem to be encouraging more activity. As a result, while conversion will obviously be dependent on market conditions, we expect activity levels to remain healthy," he added.

Shares of JPMorgan were up nearly 3% in early hours of trade after falling in pre-market trading as the bank raised its forecast for 2026 expenses to $107.5 billion from $105 billion on the back of higher volume and revenue related expenses.

With its market value now at more than $920 billion, the lender is edging closer to joining Wall Street's elite trillion-dollar club.

The largest U.S. lender posted a profit of $21.2 billion, or $7.70 per share which was boosted by a one time gain tied to its stake in Visa.

Markets revenue, which houses trading operations, surged 35% over the prior year.

On an adjusted basis, its profit of $6.14 per share beat expectations of $5.85, according to estimates compiled by LSEG.

"Record revenues in every business segment powered a blowout quarter for JPMorgan, specifically investment banking revenues and trading revenues demonstrated how strong capital markets are currently," said Brian Mulberry, chief market strategist at Zacks Investment Management that holds JPMorgan stocks.

INTEREST INCOME FORECAST GETS A BUMP

Net interest income, excluding markets, rose 4% from a year earlier to $23.7 billion in the quarter, while average loans climbed 10%.

It raised its 2026 forecast for interest income to $96.5 billion, excluding markets, from $95 billion. Interest income, including markets, is expected to rise to $105.5 billion this year, compared with $103 billion earlier.

The bank also reduced its net-charge off rate to 3.2% from 3.4% this year as the U.S. consumer remained healthy and didn't show any major signs of stress.

Although banks have continued to describe consumers as resilient, the health of lower-income borrowers remains a key focus as higher interest rates and still-elevated living costs pressure household finances.

Investors are also closely watching succession planning at JPMorgan. Dimon plans to remain CEO for at least three more years, Reuters reported last month, citing a source.

The bank's leadership reshuffle in June elevated Petno and Troy Rohrbaugh to co-presidents and marked the retirement of Marianne Lake, long viewed by Wall Street as a leading contender to succeed Dimon.

Revenue at the consumer and community banking business - now under the stewardship of Rohrbaugh - climbed 8% in the second quarter.

Dimon said on Tuesday that the timetable for his departure as CEO of the largest U.S. bank remains unchanged. He declined to give a clear answer on the timeline saying it is up to the board. Reuters reported last month that Dimon planned to remain CEO for at least three more years.

INVESTMENT BANKING WINDFALL

JPMorgan's investment banking fees jumped 30% in the second quarter from a year earlier, higher than the bank's earlier estimate.

The bank was part of several landmark transactions during the quarter, including as co-adviser on NextEra Energy's $67 billion merger with Dominion Energy and lead active bookrunner on Alphabet's $85 billion equity offering.

The value of global mergers and acquisitions announced so far this year has surpassed $3 trillion, according to Dealogic data, adding momentum to one of banks' biggest fee-generating businesses: advising on deals.

JPMorgan's equity trading revenue surged 86%, while fixed-income trading revenue increased 6%.

"The eye-popping 86% explosion in stock trading and a total resurgence in investment banking prove that when the macro environment gets volatile, Wall Street's biggest whale simply eats everyone else's lunch," said David Wagner, Head of Equity and Portfolio Manager at Aptus Capital Advisors which holds JPMorgan stocks.

Rival Goldman Sachs GS.N and Bank of America BAC.N also posted higher profits on Tuesday, thanks to strength in trading and dealmaking. Wells Fargo's WFC.N profit was boosted by higher interest income.

AI AND JOBS

The bank has already built 1,000 use AI use cases across risk functions, marketing, hedging, note taking, idea generation, note taking among others.

Dimon said that there are areas where the bank has reduced job by 30% to 40% due to AI, however, most employees were able to find jobs within the company.