New York - JPMorgan Chase & Co. posted earnings that
beat analysts’ estimates, fuelled by better-than-expected trading results and
lending margins.
The report, which sent JPMorgan shares higher in early
trading, is the first to show how much money the biggest US banks made from
helping clients trade stocks and bonds. Chief Financial Officer Marianne Lake
said in February that while markets revenue would be modestly higher in the
first quarter, the firm would probably suffer from a difficult comparison to a
strong performance in 2016.
Markets improved in March, helping the New York-based firm
post a 17 percent gain in fixed-income trading revenue to $4.22 billion and a
surprise increase in equity trading, which rose 2 percent to $1.61 billion.
Trading revenue rose for a fourth straight quarter, the longest streak in at
least a decade.
The results exceeded analysts’ $4.02 billion estimate for
bond trading and $1.45 billion for equities. The bond gains were driven by
rates trading linked to upcoming elections in Europe and central bank actions
and improved credit trading.
Bank shares have climbed since the November US election in
part on expectations the Federal Reserve’s interest-rate increases would buoy
profits.
That appears to be starting, as JPMorgan’s net interest margin, the
difference between what it charges borrowers and pays depositors, rose 11 basis
points from the preceding quarter to 2.33 percentage points, the first increase
in a year and the highest since the first quarter of 2013. KBW analysts
predicted a jump of 4 basis points.
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“With pro-growth initiatives and improving collaboration
between government and business, the US economy can continue to improve,” Chief
Executive Officer Jamie Dimon said in the statement.
Companywide revenue rose 6 percent to $25.6 billion,
compared with the $25.2 billion average estimate of analysts surveyed by
Bloomberg. Noninterest expenses climbed 9 percent to $15 billion, topping
analysts’ $14.6 billion estimate.
Net income jumped 17 percent to $6.45 billion, or $1.65 a
share, from $5.52 billion, or $1.35, a year earlier, according to the
statement. Adjusted earnings were $1.57 a share, beating the $1.52 average
estimate of 23 analysts surveyed by Bloomberg.
JPMorgan shares had dropped 1 percent this year through
Wednesday, the second-best performance among the six biggest US banks. They
climbed 0.9 percent to $86.20 in early trading at 7:37 a.m. in New York.
Investment Bank
Earnings at the corporate and investment bank soared 64
percent to $3.24 billion as revenue rose 17 percent from a year earlier,
outpacing a 7 percent increase in expenses. Investment-banking revenue
rose 34 percent to $1.7 billion on higher debt and equity underwriting fees,
compared with analysts’ $1.61 billion estimate.
Profit from consumer and community banking fell 20 percent
to $1.99 billion as the provision for credit losses rose 36 percent to $1.43
billion because of a write-down in the student-loan portfolio and higher
credit-card charge offs. Revenue was $10.97 billion, down 1 percent from a year
earlier.