JPMorgan Chase released third quarter results on Wednesday that exceeded expectations with a $ 1.5 billion increase due to better-than-expected credit losses.
The profit came after the bank raised $ 2.1 billion.
The bank posted earnings of $ 3.74 per share, which includes a 52 cents per share increase from reserve releases and 19 cents per share earnings on a tax return. JPMorgan’s shares were down 2.7%, giving up gains in early trading.
Here are the numbers:
- Earnings: $ 3.74 per share versus $ 3 per share estimate by analysts surveyed by Refinitiv.
- Revenue: $ 30.44 billion versus $ 29.8 billion estimate.
The bank “delivered strong results as the economy continued to show good growth – despite the dampening effect of the Delta variant and interruptions in the supply chain,” said CEO Jamie Dimon in the statement. “We released $ 2.1 billion in credit reserves as the economic outlook continued to improve and our scenarios improved accordingly.”
Dimon repeated a message from the previous quarters, which also benefited from the release of reserves, that managers did not see profit as fundamental to their business. The company set aside billions of dollars for losses after the coronavirus pandemic outbreak last year, and this year released those funds after the losses didn’t happen.
In fact, analysts have said that banks have got most of the good from the releases and must now rely on core activities like growing credit and rising interest rates to grow their profits.
Company-wide revenue rose 2% to $ 30.4 billion, largely driven by booming fees in the company’s investment banking and asset and wealth management divisions. Net interest income of $ 13.2 billion displaced StreetAccount’s estimate of $ 12.98 billion for higher interest rates and balance sheet growth.
Fixed income revenue fell 20% to $ 3.67 billion, below StreetAccount’s estimate of $ 3.73 billion. But earnings from stock trading more than made up for the shortfall, producing $ 2.6 billion, beating the estimate of $ 2.16 billion.
Robust mergers and IPOs during the quarter helped the company’s investment bank. The company saw investment banking fees rise 50% to a record $ 3.28 billion, up half a billion US dollars.
For most of the pandemic, JPMorgan’s investment bank benefited from booming trading revenues on Wall Street. However, this should weaken in the third quarter. Last month, JPMorgan manager Marianne Lake said trading revenue will be 10% lower than a year ago, an unusually strong quarter.
The company’s wealth and asset management division saw revenue jump 21% to $ 4.3 billion due to higher management fees and growing balances. Assets under management rose 17% to $ 3 trillion on rising stock markets.
Company-wide credit growth has stabilized and is likely to pick up in the next year, driven by higher spending and increased debt restructuring among credit card users, CFO Jeremy Barnum told analysts during a conference call.
Executives were interviewed about the bank’s acquisition strategy after a number of recent transactions. Last month, it acquired Frank restaurant rating service, the infatuation and college planning platform. This was followed by three fintech start-up acquisitions last year.
Barnum hinted that the bank’s operations are likely to continue, saying that “acquisitions may still be in sight” over the next year.
JPMorgan’s shares are up 30% ahead of Wednesday this year, trailing the 37% increase in the KBW Bank index.
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