Daily Management Review

JP Morgan's third-quarter profit jumps by 24%


JP Morgan Chase, America's largest bank, on Wednesday reported its third-quarter earnings, up 24 percent to $11.7 billion.

Ben Sutherland via flickr
Ben Sutherland via flickr
Earnings per share came in at $3.74, substantially higher than the $3 expected by Refinitiv survey. The bank's revenues remained almost the same as in the third quarter last year, up 1% to $29.6bn.

JP Morgan's strong profit growth for the quarter was due to the release of $2.1 billion in reserves, previously deferred to cover credit losses, as well as strong mergers and acquisitions (M&A) activity: through this bank earned 52% more on various commissions than in the same quarter of 2020, $2.6 billion. As the Financial Times wrote earlier, the largest US investment banks have earned a record $112.6 billion on commissions on various transactions since the beginning of the year.

At that, shares of JP Morgan fell by 2.2% on Wednesday, as well as shares of other American banks. Analysts attribute this to the fact that a week ago bank shares rose on the expectation that the Fed will raise the benchmark interest rate, bank shares were actively growing and before that on the expectation of a positive effect of the overall economic recovery. In addition, according to experts, banks have now almost exhausted the possibility of profit growth by releasing previously deferred reserves.

Other major US banks are also due to report in the coming days: Bank of America, Citigroup, Wells Fargo and Morgan Stanley on Thursday and Goldman Sachs on Friday.

source: ft.com