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Investing.com — JPMorgan (NYSE:JPM) reported earnings well ahead of expectations for the third quarter on Tuesday, thanks to a sharp drop in new reserves against possible credit losses and a strong performance from both its bond and equity trading divisions.
The bank, often seen as a bellwether for the U.S. economy because of its broad exposure to both financial markets and Main Street, said earnings per share totaled $2.92, some 30% above the $2.23 consensus forecast. Revenue totaled $29.94 billion, against expectations for $28.3 billion.
Loan loss provisions fell to a meager $611 million from a whopping $8.9 billion in the second quarter. Such provisioning measures the concerns a bank has that its borrowers won’t be able to repay their loans. As such, the sharp decline suggests that the post-Covid credit landscape has brightened considerably. The bank said it had released some $569 million of the provisions it booked three months ago.
“After record provisions for bad losses in Q2, there is a good chance that the lender has seen the worst on this front and investors should expect some stabilization,” Investing.com analyst Haris Anwar said.
The bank’s core tier 1 capital ratio, a key measure of financial strength, rose by 60 basis points from the end of June to 13.0%.
The pandemic nonetheless left its scars, with income from the bank’s core lending division falling 9% from a year earlier to $13.1 billion, due largely to lower interest rates. Noninterest income, however, rose 7% to $16.8 billion, thanks to investment banking fees and trading profits. Markets revenue rose 30% while investment banking fees rose 9% on the year.
The bank’s asset management division also performed strongly, contributing $877 million to a group net profit of $9.4 billion.
(CORRECTION: An earlier version of this story incorrectly stated the loan loss provision number)
JPMorgan’s report follows an earnings beat by BlackRock on Tuesday, who reported EPS of $9.22 on revenue of $4.37B, compared to forecasts EPS of $7.73 on revenue of $3.92B.
Jefferies Financial had beat expectations on September 23 with third quarter EPS of $1.07 on revenue of $1.62B, compared to forecast for EPS of $0.34 on revenue of $1.11B.
Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com’s earnings calendar
