JPMorgan exceeds profit expectations on $1.5 billion boost from better-than-expected loan losses

JPMorgan Chase on Wednesday posted third-quarter results that exceeded expectations on a $1.5 billion boost from better-than-expected loan losses.

The gain came after the bank released $2.1 billion in reserves and had $524 million of net chargeoffs in the quarter, New York based JPMorgan said in a release. The bank produced $3.74 per share in earnings, which includes a 19 cent per share tax benefit from the company’s 2020 filing.

Here are the numbers:

• Earnings: $3.74 per share vs. $3 per share estimate of analysts surveyed by Refinitiv.
• Revenue: $30.44 billion vs $29.8 billion estimate.

“We released credit reserves of $2.1 billion as the economic outlook continues to improve and our scenarios have improved accordingly,” CEO Jamie Dimon said in the release. The firm “delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions.”

JPMorgan, the first big bank to report third-quarter earnings, will be closely watched for signs of an inflection point in the industry’s weak loan growth.

Consumers and businesses have been flush with cash this year thanks to government stimulus efforts, paying down credit card balances and taking out fewer commercial loans. That prompted Dimon to call loan demand “challenged” in April.

Another area of interest will be the firm’s Wall Street trading and advisory division. For most of the pandemic, booming trading, IPO issuance and mergers have led to robust fees for JPMorgan’s investment bank.

That is expected to moderate in the third quarter. Last month, JPMorgan executive Marianne Lake said that trading revenue will be 10% lower than a year ago, which was an unusually strong quarter.

Dimon will likely be asked about the bank’s acquisition strategy after a string of recent deals. Last month, the bank acquired restaurant review service the Infatuation and college-planning platform Frank. That followed three acquisitions of fintech start-ups in the past year.

Shares of JPMorgan have climbed 30% this year, trailing the 37% increase of the KBW Bank Index.

This story is developing. Please check back for updates.