Third-quarter profits beat forecasts at JP Morgan

JP Morgan Chase & Co reported better-than-expected quarterly numbers on Wednesday, after the Wall Street bank reduced the amount put aside to cover bad loans and corporate activity strengthened.

Third-quarter reported revenues were $29.6bn, against the previous year’s $29.3bn, while managed net revenues rose 2% year-on-year to $30.44bn. Analysts had expected managed net revenues to be largely flat.

Net income was £11.7bn, up on $9.4bn, while diluted earnings per share beat analyst expectations, rising to $3.74 from $2.92. Most analysts had been looking for EPS closer to $3.00.

JP Morgan said the rise in income had been "largely driven" by credit reserve releases of $2.1bn, considerably higher than last year’s $569m release. Once $524m of net charge-offs were taken into account, the net benefit was $1.5bn.

Chief executive Jamie Dimon said: "JP Morgan delivered strong results as the economy continues to show good growth, despite the dampening effect of the Delta variant and supply chain disruptions. We released credit reserves of $2.1bn, as the economic outlook continues to improve and our scenarios have improved accordingly.

"As we have said before, however, we do not consider these scenario-driven releases core or recurring profits."

Once the reserves release was stripped out, along with a one-off income tax benefit, net earnings came in at $9.6bn.

Within individual divisions, consumer and community banking reported a 3% fall in net revenues to $12.5bn.

But the corporate and investment bank benefited from strengthening corporate activity, including a rise in mergers and acquisitions, and saw revenues rise 7% to $12.4bn. Banking revenues were ahead 30%, while investment banking fees soared 52%, reflecting higher advisory and equity underwriting fees.

Net revenues at commercial banking rose 10% to $2.5bn, while asset and wealth management revenues improved 21% to $4.3bn.

Dimon added: "We are making important investments, including strategic, add-on acquisitions, that will drive our firm’s future prospects and position it to grow and prosper for decades."

The bank was also halfway through plans to open 400 branches in new markets by the end of 2022, he noted.

JP Morgan is kicking off the quarterly earnings season for Wall Street’s banks, with updates due this week from Morgan Stanley, Citigroup and Bank of America.

Walid Koudmani, market analyst at XTB, said: "As always, earnings season in the US begins with major financial institutions. This is a very important time in markets, as investors will be looking closely to see how companies performed during recent uncertainty brought on by supply issues, rising fuel prices and unclear monetary policy."