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Friday, October 22, 2021

JPMorgan posts surprisingly strong profits as bank releases pandemic reserves

JPMorgan Chase’s quarterly revenue jumped by more than $2 billion as the the mega-bank continued to release reserves it had set aside for possible loan defaults during the pandemic.

On Wednesday morning, the nation’s biggest bank reported profit of $11.69 billion or $3.74 a share — blowing past analysts’ expectations of $3 a share according to data from Refinitiv.

But without the $2.1 billion in reserve releases, the bank’s earnings would have been $9.6 billion this year — largely stagnant since the third quarter of last year when the bank posted $9.44 billion in profit.

“JPMorgan Chase delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions,” JPMorgan Chief Executive Jamie Dimon said in a statement.

Dimon acknowledged the profit jump stems largely from the fact JPM is benefiting from the billions it set aside last year to prepare for potential loan defaults by businesses struggling during the pandemic. “As we have said before, however, we do not
consider these scenario-driven releases core or recurring profits,” Dimon said.

JPMorgan’s investment bank was the star of the show. It surged 52 percent — hauling in $3.3 billion in fees as dealmaking, IPOs and M&A remain hot. Investment banking revenue was up 7 percent.

Asset and wealth management profits rose 36 percent stemming in part from an increase in assets under management. And the commercial bank’s profit rose 30 percent.

JPMorgan stock is up more than 30 percent this year.
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Trading revenue — which soared amid the pandemic-related market volatility of 2020 — dropped 5 percent this quarter. Fixed income trading decreased 20 percent as revenue from commodities, rates and spreads slumped. Equity markets surged 30 percent as stocks continued their strong performance — and largely offset most of the losses in fixed income.

Dimon emphasized a positive outlook moving forward, “The economy continues to show good growth.” He also highlighted the bank’s retail play — the bank now has branches in all 48 contiguous states and plans to open 400 branches in new markets.

JPMorgan stock opened the day 3.85 percent lower with shares trading at $161.40. Shares are up more than 30 percent this year.

Source

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