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JPMorgan Chase, America's largest bank reported better than expected Q3 earnings Wednesday before the open. $JPM Investment banking revenue rose 12% to $2.1 billion on higher stock and bond underwriting fees. Citbank and Wells Fargo also reported Tuesday.

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 JPMorgan Chase & Co NYSE: JPM · Report Earnings Before Open Tuesday

$2.92 Beat $2.23 EPS Forecast AND $29.94 Bil  Beat $28.30 Billion Forecast in Revenue

Earnings

JPMorgan Chase & Co (NYSE: JPM) reported third quarter profit of $9.44 billion, or $2.92 per share, exceeding the $2.23 per share consensus estimate of analysts surveyed by Refinitiv. The firm generated revenue of $29.94 billion, about $1.5 billion more than what analysts had expected, fueled in part by better-than-projected trading results.;

JPM stock had outperformed other big banks over the past year. In the JPMorgan conference call watch for macro expectations and risk given the recent weakness in many asset classes with a focus on costs from the COVID-19 lockdown. Lower interest rates hurt the results also.

JPMorgan had a $611 million provision for credit costs in the period, compared with $10.5 billion in the previous quarter.

  

JPMorgan Chase & Co NYSE: JPM

Market Reaction Close $100.78 −$1.66 (-1.62%)

Highlights

  • Lloan-loss reserves reduced them by $569 million in the quarter, citing a runoff in its mortgage portfolio. The bank had added more than $15 billion to loan loss reserves in the first two quarters of 2020.
  • Last week Barclays analyst Jason Goldberg wrote that he expected the bank to build third-quarter reserves by $857 million.
  • PMorgan booked costs tied to the firm’s record $920 million settlement to resolve probes from federal agencies over its role in the manipulation of global markets for metals and Treasurys. The firm posted $524 million in legal costs in the quarter, sapping earnings by 17 cents a share.
  • JPMorgan  trading division  revenue increased of 30% compared with the year earlier, 
  • Fixed income trading operations posted revenue of $4.6 billion and equities trading generated $2 billion in revenue, beatings estimates by a total of about $400 million.
  • Investment banking revenue rose 12% to $2.1 billion on higher stock and bond underwriting fees. Trading Revenue:

“JPMorgan CEO Jamie Dimon noted that the total size of the bank’s reserves for loan losses still rounded to $34 billion, roughly the same as the previous quarter. In the earnings release, he cited the need to maintain reserves “given significant economic uncertainty and a broad range of potential outcomes” tied to the coronavirus pandemic.” CEO Jamie Dimon said.

 JPMorgan Chase JPM Q3 2019 earnings

Outlook

“CFO Jennifer Piepszak said during a call with reporters that the bank’s “base case” for the U.S. economy improved from the previous quarter. Now, instead of assuming that unemployment will hit a nearly 11% average in the fourth quarter, the bank expects a 9.5% rate. The firm also expected a smaller contraction in GDP over the next three quarters than it had previously.

The bank said the profile of consumers using the bank’s mortgage, auto loan or credit-card deferral programs improved from the previous quarter, as balances deferred fell by half to $29,341.

“We would need to see the economy deliver our base case to reduce some of that uncertainty,” Piepszak said. If it does, then the bank can continue to release reserves, she said.

Still, the bank faces an incredibly broad range of outcomes tied to the coronavirus pandemic. Dimon said that the company could be over-reserved by a whopping $10 billion if its base scenario happens, or if its worst-case scenario develops (which they consider unlikely), they would be under-reserved by $20 billion.

JPM CEO Jamie Dimon is also chairman of the Business Roundtable for the Trump administration.

Source: JPM, AlphaStreet

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