JPMorgan Chase beats profit estimates on strong trading, $5.2 billion release of loan-loss reserves

JPMorgan Chase on Wednesday reported profit and revenue that exceeded analysts’ expectations on robust trading results and a $5.2 billion benefit from releasing money it had previously set aside for loan losses that didn’t develop.

The bank posted first-quarter profit of $14.3 billion, or $4.50 a share including a $1.28 per share benefit from the reserve release, higher than the $3.10 per share expected by analysts surveyed by Refinitiv.

Companywide revenue of $33.12 billion exceeded the $30.52 billion estimate, driven by the firm’s trading operations, which produced about $1.8 billion more revenue than expected.

“Overall, this was a great quarter for JPMorgan,” said Octavio Marenzi, CEO of consultancy Opimas. “It is now increasingly clear that the bank over-reserved, and that money is now flowing back into its earnings, concealing some of the weakness in consumer banking.”

JPMorgan shares dipped less than 1% in premarket trading.

Fixed income trading produced $5.8 billion in revenue, a 15% increase that exceeded analysts’ estimates by more than $800 million, on activity in securitized products and credit markets. Equities trading revenue surged 47% to $3.3 billion, a full $1 billion more than estimates, on “strong performance across products.”

JPMorgan, with the world’s biggest Wall Street division by revenue, was expected to benefit from robust investment banking fees driven by record issuance of SPACs, the blank check companies that saw more activity in the first quarter than all of 2020, itself a record year. The firm said first-quarter investment banking revenue surged 222%, or a full $2 billion, to $2.9 billion, exceeding the estimate of $2.65 billion.

Analysts will also be curious about the pace of share repurchases the bank is expected to make. Last month, the Federal Reserve said banks that pass the industry’s 2021 stress test will be allowed to resume higher levels of dividend payouts and buybacks starting June 30.

Shares of JPMorgan rose 21% so far this year, compared to the 25% advance of the KBW Bank Index.

Here are the numbers:

Earnings: $4.50 per share, vs. $3.10 per share expected by analysts polled by Refinitiv.
Revenue: $33.12 billion, vs. $30.52 billion expected.

This story is developing. Please check back for updates.