REUTERS: JPMorgan Chase & Co comfortably beat Wall Street estimates for third-quarter profit on Tuesday as the largest U.S. bank gained from a boom in trading in financial markets and set aside virtually no provisions for loan losses.
JPMorgan is widely seen as a barometer for the health of the broader economy, and its robust performance this quarter bodes well for Bank of America and other large lenders reporting this week. Its shares jumped 1.7per cent in premarket trading.
The upbeat results were driven in part by a huge fall in the reserve provisions it puts aside - just US$611 million, compared with the US$10.5 billion three months ago, suggesting the bank believes it has taken the bulk of the pain for now for the coronavirus-driven slump.
Trading was another bright spot for the quarter, even as the pandemic decimated the U.S. economy, with thousands of businesses shutting down and the unemployment rate soaring. The economic fallout of the pandemic has triggered one of the worst recessions in decades.
Overall revenue fell slightly to US$29.9 billion, but still came in ahead of analysts' expectations. Revenue from three of its four main reporting lines rose, including trading, which jumped 30per cent to US$6.6 billion.
Strong growth from capital markets and investment banking helped offset declines in its consumer business.
Consumer banking revenue fell 9per cent to US$12.76 billion, hurt mainly by lower interest rates. However, provision for credit losses fell to US$794 million, driven mainly by a stronger performance from its cards business.
JPMorgan's net interest income fell 9per cent to US$13.1 billion as the U.S. Federal Reserve kept rates at nearly zero to offset the impact of the pandemic. Net interest margin fell to 1.82per cent from 1.99per cent in the previous quarter.
The lender maintained its forecast for full-year interest income at about US$55 billion. It also said adjusted expenses for the full year will be up to US$66 billion, worse than its forecast of US$65 billion three months ago.
Metrics such as net interest margin are closely watched by investors to show how much central-bank rate policies are affecting income, and how well banks are managing their balance sheets.
The bank's net income rose to US$9.44 billion, or US$2.92 per share, in the quarter ended Sept. 30, from US$9.1 billion, or US$2.68 per share, a year earlier.
Analysts on average had expected earnings of US$2.23 per share, according to Refinitiv.
Citigroup Inc reports later on Tuesday, followed by Goldman Sachs Group Inc , Wells Fargo & Co and Bank of America Corp on Wednesday and Morgan Stanley on Thursday.
(Reporting by Noor Zainab Hussain in Bengaluru and David Henry in New York; Writing by Anirban Sen; Editing by Saumyadeb Chakrabarty)