JPMorgan beats third-quarter net income expectations

JPMorgan Chase reported third-quarter net income of $13.2bn on Friday, equating to $4.33 per share.

That was down from $4.75 per share in the second quarter but was up from $3.12 a year ago and well ahead of consensus expectations for $3.97 per share.

Reported revenue totalled $39.9bn and managed revenue came in slightly higher at $40.7bn, although the US banking behemoth recorded a $669m hit from net investment securities losses and a substantial $665m earmarked for firmwide legal expenses.

Those impacted earnings per share by 17 and 22 cents, respectively.

Across the firm’s different segments, the consumer and community banking (CCB) division managed a robust return on equity (ROE) of 41%, with a noteworthy 43% surge in client investment assets and a 27% year-over-year increase in average loans, despite a 3% dip in average deposits.

The corporate and investment bank (CIB) segment experienced a 3% decline in total market revenue, with equity markets falling by 10%, although it retained its number one global position in investment banking fees, claiming an 8.6% wallet share year-to-date.

In the commercial banking (CB) sector, a promising return on equity of 25% was reported, coupled with an 8% uplift in gross investment banking and market revenue, amassing $821m.

Average loans saw healthy year-on-year growth of 24%, although average deposits took a 7% downturn.

Asset and wealth management recorded a return on equity of 32%, alongside a 22% elevation in assets under management, which now stood at $3.2trn.

However, a significant 20% decline in average deposits was also reported in the division.

JPMorgan noted its adherence to its ‘Fortress Principles’ with a 15% rise in book value per share, now at $100.30, and a 17% increase in tangible book value per share, reaching $82.04.

Basel III common equity tier 1 capital registered at $242bn, with a standardised ratio of 14.3% and an advanced ratio of 14.5%.

Furthermore, the firm reported a supplementary leverage ratio of 6.0%.

Additionally, in line with its operating metrics, the bank disclosed third-quarter expenses totalling $21.8bn, with a reported overhead ratio of 55% and a managed overhead ratio of 53%.

From a capital distribution perspective, a common dividend of $3.1bn, or $1.05 per share, was declared, alongside $2bn of common stock net repurchases and a net payout for the last 12 months of 35%.

“Our lines of business saw continued momentum in the quarter, demonstrating the power of our years of investment and the value of our consistency and fortress principles,” said chairman and chief executive officer Jamie Dimon.

“Across the firm, we continued to add a sizable number of new clients and deepen relationships.

“In CCB, we again ranked number one in US retail deposits based on the most recent FDIC data, and we extended our leadership position as our growth from net new accounts was over three times that of peers.”

Dimon noted that in CIB, JPMorgan maintained its number one Dealogic rank and gained IB market share year-to-date.

“In CB, payments revenue remained strong and was up 30%, and AWM saw assets under management net inflows of $60bn.

“Finally, we extended credit and raised $1.7trn in capital for businesses, governments, and US consumers year-to-date.”

At 0803 EDT (1303 BST), JPMorgan Chase & Co shares were up 1.06% in NYSE premarket trading at $147.35.

Reporting by Josh White for Sharecast.com.