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.
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.