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JPMorgan Chase $JPM, America's largest bank kicked off the banking sector's Q417 earnings season on Friday before the market opens with better than expected results, along with the other money center major bank Wells Fargo $WFC and PNC Financial $PNC. 

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Reaction: JP Morgan Chase NYSE $JPM Premarket $111.15 +$0.40 +.27%

Earnings:  EPS of $1.76 beat analysts expected EPS of $1.67.Revenue of $25.45 best $24.987 billion expected.

Highlights

  • Earnings figure excludes a $2.4 billion negative impact from the Trump tax cuts
  • Fixed income, credit and currency trading revenue fell 34% to $2.22 billion.
  • Consumer and business banking revenue rose 16% to $5.6 billion.
  • Commercial banking revenue rose 20% to $2.4 billion 
  • Asset and wealth management revenue rose 9% to $3.4 billion. 

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Bank stocks jumped earlier in the year after the largest U.S. banks passed Fed stress tests and were allowed to raise dividends and share buybacks. The Fed as it raise rates is helping banks' finances giving their earnings a boost. However auto and student loans overhang the banking and finance sectors.

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

Outlook:

JPMorgan sees a 19% effective tax rate in 2018.

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

Source: JPM, AlphaStreet

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