JPMorgan less worried on loans as trading booms

In this news, we discuss the JPMorgan less worried on loans as trading booms.

(Reuters) – JPMorgan Chase & Co JPM.N comfortably beat Wall Street estimates for third-quarter earnings on Tuesday as the largest US bank benefited from a trade boom in financial markets and had little to no provisioned for loan losses.

JPMorgan is widely regarded as a barometer of the health of the economy as a whole, and its strong performance this quarter bodes well for Bank of America BAC.N and other major lenders who reported this week. Its shares jumped 1.7% in pre-market trading.

The optimistic results were in part due to a huge drop in the reserve provisions it sets aside – just $ 611 million, down from $ 10.5 billion three months ago, suggesting the bank thinks have taken most of the pain for the coronavirus so far. sagging driven.

Trade was another bright spot for the quarter, even as the pandemic decimated the U.S. economy, with thousands of businesses closed and unemployment soaring. The economic fallout from the pandemic triggered one of the worst recessions in decades.

Overall revenue edged down to $ 29.9 billion, but still exceeded analysts’ expectations. Revenues from three of its four main reporting lines increased, including trading, which jumped 30% to $ 6.6 billion.

Strong growth in financial markets and investment banking helped offset the decline in its consumer activities.

Revenues from consumer banking services fell 9% to $ 12.76 billion, mostly affected by lower interest rates. However, the allowance for credit losses fell to $ 794 million, mainly due to a better performance in its card business.

JPMorgan’s net interest income fell 9% to $ 13.1 billion as the U.S. Federal Reserve kept rates near zero to offset the impact of the pandemic. The net interest margin fell to 1.82% from 1.99% in the previous quarter.

The lender kept its interest income forecast for the full year at around $ 55 billion. He also said adjusted spending for the full year would hit $ 66 billion, worse than his forecast of $ 65 billion three months ago.

Metrics such as the net interest margin are closely watched by investors to show how much central bank rate policies affect income and how well banks manage their balance sheets.

The bank’s net income rose to $ 9.44 billion, or $ 2.92 per share, in the quarter ended Sept. 30, from $ 9.1 billion, or $ 2.68 per share, a year earlier.

Analysts on average expected earnings of $ 2.23 per share, according to Refinitiv.

Citigroup Inc CN reports later on Tuesday, followed by Goldman Sachs Group Inc GS.N, Wells Fargo & Co WFC.N and Bank of America Corp BAC.N on Wednesday and Morgan Stanley MS.N on Thursday.

Reporting by Noor Zainab Hussain in Bengaluru and David Henry in New York; Written by Anirban Sen; Edited by Saumyadeb Chakrabarty

Original © Thomson Reuters

Originally posted 2020-10-13 12:16:10.

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