JPMorgan beats 3rd-quarter profit estimates as investment-banking arm sees record M&A fees
JPMorganreported third-quarter earnings Wednesday that beat analysts' profit estimates.
- M&A advisory fees nearly tripled during the period, helping push quarterly net income to $11.7 billion.
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The largest US bank posted a 24% jump in profit from a year ago, with quarterly net income of $11.7 billion, or $3.74 per share for the quarter ended September. That beat Wall Street analysts' average expectation for $8.9 billion, or $2.98 per share, according to a Bloomberg poll.
Those figures compare with earnings of $11.9 billion and $3.78 per share in the previous quarter, and of $9.4 billion and $2.92 per share in the same period last year.
M&A advisory fees nearly tripled during the period, jumping 52%, helping drive the profit beat.
The bank released $2.1 billion in reserves set aside to cover possible bad loans during the pandemic and booked $524 million in quarterly net charge-offs, for a benefit to its earnings of $1.5 billion. Excluding those boosts, JPMorgan's quarterly net income was $9.6 billion.
Here are the key quarterly numbers:
- Earnings per share: $3.74 vs. $2.98 expected, and $2.92 a year ago.
- Net Revenue: $30.4 billion vs. $29.9 billion expected, and $29.2 billion a year ago.
JPMorgan is seen as a bellwether company - one whose earnings reflect the health of the US economy as it continues to reopen after pandemic restrictions. The Wall Street bank's third-quarter financial update will be scrutinized for signs on how the overall industry is expected to fare this quarter.
"We released credit reserves of $2.1 billion, as the economic outlook continues to improve and our scenarios have improved accordingly," he added.
Ahead of the earnings release, analysts were interested in an update on its trading and advisory division. The investment bank raked in robust fees during the pandemic alongside a boom in trading, IPO issuance, and mergers.
The lender's revenue for the third quarter rose 1% to $29.65 billion from $29.26 billion a year ago. Analysts polled by Bloomberg had expected $29.9 billion.
JPMorgan's investment banking arm performed well with revenue of $1.3 billion, up 60% on the year, indicating the strength of the mergers and acquisition market.
Those gains offset the effect of market normalization and reduced volatility that dampened its trading business to some extent, the bank said.
JPMorgan's stock rose 0.3% in Wednesday's premarket session to $166 per share, and is up 30% so far this year.
Read More: Morgan Stanley identifies 4 stock picks to buy in Q3 earnings season, including one with 27% upside - and explains why they stand out in a market that's set to slump as analysts turn bearish
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