New York: Another quarterly drop-off in trading didn’t keep JPMorgan Chase & Co. from posting higher revenue and a fatter profit.
The biggest US bank showed once again on Thursday that it can weather a downturn in fixed-income trading by generating growth elsewhere. An increase in corporate loans, the highest lending margin in 4 1/2 years and record profit in asset management helped the lender top analysts’ estimates.
JPMorgan’s third-quarter results, which kicked off the industry’s earnings season, show that while calm and rising markets have given clients little reason to trade, the firm’s core lending and advisory businesses performed well, aided by three Federal Reserve rate increases in the past year. Revenue at the commercial bank surged to a record, and the retail bank posted higher profit than the firm’s investment bank for the first time in more than a year.
Trading revenue tumbled 21%, steeper than the 20% forecast last month by chief executive officer Jamie Dimon. Revenue from fixed-income trading slumped 27%, in line with analysts’ predictions. Equity-trading revenue slid 3.6%, missing estimates. Citigroup Inc. posted slightly stronger results Thursday, as bond-trading revenue dropped 16% to $2.88 billion and equities climbed 16% to $757 million.
“Last year’s record third quarter somewhat overshadows year-over-year comparisons, but this quarter was quite good in its own right, with solid underlying performances across the businesses,” Daniel Pinto, head of the investment bank, said in a memo to staff.
JPMorgan shares slipped 13 cents to $96.71 at 9:44am in New York. The stock has climbed 12% this year, trailing by one percentage point the advance of the 24-company KWB Bank Index.
Provisions for loan losses increased 20% to $1.45 billion from the second quarter, higher than the $1.34 billion analysts expected.
Net interest margin, the difference between what banks charge borrowers and pay depositors, climbed to 2.37% in the third quarter, according to a statement. That’s the highest since the first quarter of 2013. Interest income rose 10% to $13.1 billion. Total loans rose to $913.8 billion in the period, an increase of 0.5% from the second quarter and 2.9% from a year earlier.
Financial stocks have soared since President Donald Trump’s surprise election last year, and were the best performers among 11 major S&P 500 industries through the end of the third quarter, fuelled by optimism that higher rates and lower taxes would goose profits. New York-based JPMorgan helped pace the advance, surging 42% in that span.
Net income rose 7.1% to $6.73 billion, or $1.76 a share, from $6.29 billion, or $1.58 a year earlier. Adjusted earnings per share were $1.75, beating the $1.65 average estimate of 21 analysts surveyed by Bloomberg.
Total revenue rose 2.7% to $26.2 billion, topping the $25.6 billion estimate. Bloomberg