JPMorgan springs surprise with record trading revenue
JPMorgan Chase & Co said a "broad-based" economic recovery boosted first-quarter earnings by 55pc, surprising analysts with record fixed-income trading revenue and a better-than-expected outlook for consumer credit.
Net income at the second-biggest US bank by assets climbed to $3.33bn (€2.43bn), or 74c a share, from $2.14bn, or 40c, in the same period a year earlier and from $3.28bn in the fourth quarter, the company said yesterday.
Record fixed-income trading revenue and a reduction in provisions for credit losses helped the bank beat the average estimate of 64c per share projected by 21 analysts surveyed by Bloomberg.
"There is clear and broad-based improvement in the economic factors in the United States and around the world," CEO Jamie Dimon, told reporters. He cited signs including stabilising US home prices that signal the economy may be poised for a "strong recovery".
CFO Mike Cavanagh said delinquencies for credit cards and mortgages in which the borrower is behind by just one payment also improved in the first quarter, indicating that consumers' finances are gaining strength after the worst recession in more than 70 years.
JPMorgan, which repaid $25bn in federal aid last year, remained profitable throughout the financial crisis, relying on fee income to counter loan losses in mortgage lending and credit cards.
The bank generated 75pc of its first-quarter profit from its investment bank.
"Nobody saw those types of numbers coming," said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia.
JPMorgan's earnings bode well for Bank of America and other banks, which report earnings later this month, Mr Miller said.
"Credit remains a wild card here, but Jamie talked very, very positive about credit and the consumer," he added.
"China's growing, India's growing, Japan is growing, home prices have stopped going down, consumer income is up, consumers are spending, service and manufacturing indexes are up, inventories are still low, I could go on and on," Mr Dimon said.
"This could be the makings of a good recovery. We don't know . . . but if you look at those factors, it's pretty good."