J. P. Morgan Chase topped analysts’ expectations for third quarter earnings as better-than-expected retail banking results offset weakness in bond trading.
The bank beat expectations for earnings and revenue: J.P. Morgan reported revenue of $27.8 billion, versus the $27.5 billion average estimate of analysts surveyed by Refinitiv. Earnings per share rose 33 percent to $2.34, beating expectations for $2.25.
Shares of the New York-based bank rose 1.3% in premarket trading.
The bank’s provision for credit losses was $948 million, down sharply from $1.5 billion a year earlier and beating the expectation for $1.46 billion as it released reserves as consumer credit improved.
Meanwhile, the company posted $2.84 billion in fixed income revenue, a 10 percent decline that missed analysts’ expectations for $2.96 billion. Equities trading came in at $1.6 billion, edging out the $1.43 billion estimate. Last month, the bank said that trading revenue was headed for a mid-single-digit decline.
J.P. Morgan is the first major lender to report earnings. The company is closely watched by investors looking for clues into how the industry’s Wall Street and Main Street businesses fared in the quarter.
Bank stocks have been pummeled recently as surging U.S. interest rates stoke worries that the industry’s profitability has peaked. While rising rates typically helps lenders early in the cycle, eventually competition for deposits forces banks to pay higher interest rates, shrinking margins. Sluggish loan growth could also hamper interest income, which is one of the main ways lenders make money.
The KBW Bank Index has dropped 5.8 percent since last Friday, and shares of several banks including Wells Fargo and Goldman Sachs have fallen more than 20 percent from recent highs. J.P. Morgan has fared better at about 9 percent below its high-water mark.
Still, the bank is making long-term bets on the U.S. economy. Last month Chief Executive Officer Jamie Dimon pledged $500 million for a new program called AdvancingCities to boost opportunities for people who have been left behind by economic growth. It also said it was opening 50 new branches in the Philadelphia area, part of a broader plan to use its corporate tax cut windfall to open 400 branches to deepen its retail reach.
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