The largest US bank on Wednesday announced a profit of $ 11.7 billion, or $ 3.74 per share, against $ 2.92 per share in the same period last year. Analysts were forecasting stable earnings at $ 9.4 billion, according to consensus data compiled by Bloomberg.
JPMorgan reported revenue of $ 30.4 billion for the quarter, up from $ 29.9 billion a year earlier and ahead of analysts’ forecast of $ 29.9 billion.
Managing Director Jamie Dimon called the results “strong” despite “the moderating effect of the Delta [coronavirus] supply chain variations and disruptions ”.
“Underlying everything, we always see a strong consumer, strong businesses, a lot of capital, a lot of credit,” Dimon said on a call with reporters.
However, Jeremy Barnum, CFO of JPMorgan, also signaled that spending, which appeared to be a “wild card” for bank profits this quarter, would “realistically” be higher again in 2022.
Costs are driven by higher salaries in performance-related roles like investment banking, but the lender is also investing in technology to compete with emerging fintech competitors.
“We’ll spend whatever we have to spend to compete with all of these people in our space,” Dimon said.
The bank has signaled signs of loan growth, with total loans in the quarter increasing 6% year-on-year to $ 1 billion, close to analysts’ forecasts. The growth came largely from loans from the bank’s asset and wealth management division, which rose 20%. Commercial loans were down 11% year-on-year.
Demand for loans has been sluggish in 2021 as large companies still have cash from large capital increases in 2020 and consumers use government stimulus funds to pay down debt.
Barnum said loan growth remained “subdued,” but the bank hoped it “may be on the verge of starting more robust growth across the business,” particularly in credit cards.
JPMorgan, which is one of the largest credit card issuers in the United States, reported growth in average card balances for the first time since Q1 2020, but said it was making less on these accounts .
Card revenue, a measure of how much the bank earns in non-interest charges on credit cards, fell 14%, despite a 1% increase in card loans, as JPMorgan ramped up spending by marketing to acquire new customers.
Overall, it was a “strong quarter,” according to analysts at Baird, who cautioned to “look for [stock] gains given the high expectations in the report ”.
JPMorgan shares were down about 2.4% in morning trading in New York.
The bank’s profits were bolstered by the release of $ 2.1 billion in reserves that JPMorgan set aside at the start of the pandemic to cover potential loan losses, which have so far been far less severe than planned. JPMorgan’s provisions, which peaked at $ 34.3 billion last year, now stand at $ 20.5 billion, above pre-Covid-19 levels of 14.3 billion of dollars.
Profits were also supported by wealth management and investment banking commissions, which took over from the slowdown in bond trading.
Investment banking fees rose 52% year-on-year to $ 3.3 billion, beating analysts’ forecasts of $ 2.7 billion. Investment banks rake in large sums of fees thanks to a rush to deal.
The investment bank’s profits set the bar high for rivals Goldman Sachs and Morgan Stanley, which report results later this week.
Additional reporting by Imani Moise in New York