© Reuters. FILE PHOTO: JP Morgan Chase & Co. corporate headquarters in New York
By Noor Zainab Hussain and David Henry
(Reuters) – JPMorgan Chase & Co (N 🙂 significantly outperformed Wall Street's third quarter earnings estimates on Tuesday as the largest U.S. bank benefited from a boom in financial markets and virtually no provision for loan losses has formed.
JPMorgan is widely viewed as a barometer of overall economic health, and its robust performance this quarter bodes well for Bank of America (N 🙂 and other major lenders reporting this week. Its shares rose 1.7% in premarket trading.
The bullish results were partly due to a huge drop in provisions for reserves – just $ 611 million compared to $ 10.5 billion three months ago. forced break-in.
Trade was another bright spot for the quarter, despite the pandemic decimating the US economy, closing thousands of businesses and spiking the unemployment rate. The economic fallout from the pandemic sparked one of the worst recessions in decades.
Total revenue declined slightly to $ 29.9 billion, but exceeded analysts' expectations. Revenue from three of the four main reporting lines, including trading, increased 30% to $ 6.6 billion.
Strong growth in capital markets and investment banking helped offset declines in consumer business.
Consumer banking revenue decreased 9% to $ 12.76 billion, mainly impacted by lower interest rates. However, the provision for credit losses decreased to $ 794 million, mainly due to stronger performance in the card business.
JPMorgan's net interest income fell 9% to $ 13.1 billion as the US Federal Reserve held rates near zero to offset the effects of the pandemic. The net interest margin decreased from 1.99% in the previous quarter to 1.82%.
The lender maintained its full-year interest income forecast of approximately $ 55 billion. Adjusted spending for the full year will be up to $ 66 billion, which is worse than the forecast of $ 65 billion three months ago.
Metrics like net interest margin are closely watched by investors to show how much central bank interest rate policy is affecting income and how well banks are managing their balance sheets.
The bank's net income rose to $ 9.44 billion, or $ 2.92 per share, from $ 9.1 billion, or $ 2.68 per share, for the quarter ended September 30.
According to Refinitiv, analysts had expected an average profit of $ 2.23 per share.
Citigroup Inc (N 🙂 reported later on Tuesday, followed by Goldman Sachs Group Inc (N :), Wells Fargo & Co (N 🙂 and Bank of America Corp (N 🙂 on Wednesday and Morgan Stanley (N 🙂 on Thursday.
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