JPMorgan Chase released third quarter results on Wednesday that exceeded expectations with a $ 1.5 billion increase due to better-than-expected credit losses.
Profits came after the bank posted $ 2.1 billion in earnings of $ 3.74 per share, which was an increase of 52 cents per share from reserve releases and 19 cents per share earnings on a tax return contains. JPMorgan stock rose 0.78% in pre-trading hours.
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.
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 echoed a message from previous quarters, benefiting from the release of reserves, that managers did not see the benefits as fundamental to their business. The company set aside billions 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 out of the releases and must now rely on core activities like growing credit and rising interest rates to grow their profits.
Company-wide revenue increased 2% to $ 30.4 billion, largely driven by booming fee income 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.
But a solid level of mergers and IPOs helped the company's investment bank. The company saw investment banking fees increase 50% to $ 3.28 billion, up half a billion US dollars.
Throughout 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 executive Marianne Lake said trading volume 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.
Dimon will likely be asked about the bank's acquisition strategy after a number of new deals. Last month, the bank acquired Frank restaurant rating service, the infatuation and college planning platform. This was followed by three acquisitions of fintech start-ups last year.
JPMorgan's shares are up 30% ahead of Wednesday this year, trailing the 37% increase in the KBW Bank index.
This story evolves. Please check again for updates.
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