JPMorgan Earnings Blow Past Expectations on $5.2 Billion Reserve Release
Investing.com
Published Apr 14, 2021 06:51AM ET
JPMorgan Earnings, Revenue Beat in Q1
By Geoffrey Smith and Dhirendra Tripathi
Investing.com - Wall Street's biggest banks set a blistering start to the first-quarter earnings season, with both JPMorgan and Goldman Sachs thriving against a backdrop of extraordinarily buoyant capital markets.
Goldman Sachs (NYSE:GS) reported record revenue and earnings for the quarter, with equities markets revenue in particular rising over 68% from a year ago.
JPMorgan (NYSE:JPM) also reported earnings per share nearly 50% ahead of expectations for the three months through March - albeit thanks largely to one-off factors and extraordinary conditions in capital markets.
Revenue was nearly 10% ahead of expectations at $33.12 billion, but the bank's cost-income ratio ticked higher to 58% from 55% in the final quarter of 2020.
Goldman stock rose 1.8% in premarket trading by 8:10 AM ET (1210 GMT), while JPMorgan stock fell 0.6%, reflecting disappointment at the comparatively soft performance of its Main Street lending operations.
JPMorgan's numbers were juiced by the release of some $5.2 billion in reserves against possible loan losses that the bank had built at the start of the pandemic. The bank made $1.1 billion of fresh write-offs in the quarter.
CEO Jamie Dimon said in a statement that the bank's remaining credit reserves of $26 billion "are appropriate and prudent, all things considered,” and stressed that the release of previous reserves should not be regarded as a recurring factor.
The corporate and investment bank arm flourished, as expected, against a backdrop of buoyant financial markets and a boom in the formation of Special Purpose Acquisition Companies. Overall revenue at the division was up 46% from a year earlier at $14.6 billion. Equity markets revenue was up 47% at $3.3 billion, while fixed-income revenue was up 15% at $5.8 billion.
Investment banking revenue was $2.9 billion, up $2 billion, as investment banking fees rose 57%.
The consumer bank, by contrast, put in a weaker performance, with home lending stagnating on the quarter and modest declines in consumer and auto loans, against a backdrop of steadily rising interest rates.
JPMorgan shares are up 21% from the beginning of the year, still down 4.69% from its 52 week high of $161.68 set on March 18. They are outperforming the S&P Global 100 which is up 8.82% from the start of the year.
Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS) are also set to report before the opening bell.
Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.