JPMorgan beats 3rd-quarter profit estimates as investment-banking arm sees record M&A fees

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JPMorgan beats 3rd-quarter profit estimates as investment-banking arm sees record M&A fees
JPMorgan CEO, Jamie Dimon. Brian Snyder/Reuters
  • JPMorgan reported 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.

JPMorgan Chase reported third-quarter earnings Wednesday that beat analyst expectations, helped by a strong performance in its investment banking division.

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.

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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:

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  • 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.

"JPMorgan Chase delivered strong results as the economy continues to show good growth - despite the dampening effect of the Delta variant and supply chain disruptions," Jamie Dimon, the bank's chairman and CEO, said in a statement.

"We released credit reserves of $2.1 billion, as the economic outlook continues to improve and our scenarios have improved accordingly," he added.

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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.

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Those gains offset the effect of market normalization and reduced volatility that dampened its trading business to some extent, the bank said.

Its total markets revenue declined 5% to $6.3 billion, with fixed income markets down 20%. This was due to lower revenue in commodities, rates, and spread products compared with 2020, the bank said. However, revenue for the equity markets division was up 30% to $2.6 billion, driven by a solid performance across products.

JPMorgan's stock rose 0.3% in Wednesday's premarket session to $166 per share, and is up 30% so far this year.

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