JPMorgan Was Firing on All Cylinders in the First Quarter
Faster loan growth, better trading and the best start to a year since 2007 for merger advisory work helped JPMorgan Chase & Co, to a higher-than-expected 17 percent rise in profit in the first quarter.
The biggest U.S. bank by assets said Thursday its bottom line rose to $6.45 billion from $5.52 billion a year earlier, pushing its shares up 1.3% in premarket trading.
Trading increased across Wall Street over the past year as investors changed their positions around the Brexit vote, the U.S. elections and the Federal Reserve’s hikes in interest rates.
Customers also borrowed more as the economy expanded, though the pace of loan growth has slackened somewhat recently.
“We are off to a good start for the year with all of our businesses performing well and building on their momentum from last year,” Chief Executive Jamie Dimon said in a statement.
“U.S. consumers and businesses are healthy overall and with pro-growth initiatives and improving collaboration between government and business, the U.S. economy can continue to improve,” Dimon said.
Net revenue rose 6.2% to $25.6 billion, compared with an estimate of $24.9 billion. Revenue from markets rose 14%, with bond revenues surging 17%.
The bank’s figures also started to show the impact of the slow rise in U.S. interest rates after over seven years of efforts by the Federal Reserve to keep them at basement levels. Net interest income rose 6% to $12.4 billion, primarily driven by loan growth and the net impact of higher rates.
The Fed raised rates by 0.25 percentage points in December and again in mid-March, its second and third hikes after keeping them near zero for seven years. Higher interest rates are usually good for banks, allowing them to charge higher rates on loans.
Investment banking revenue was up 34% at $1.65 billion, helped by higher debt and equity underwriting fees that reflected strong underlying issuance activity and share gains.
Fees for global investment banking services, which include M&A advisory and capital markets underwriting, increased 26% over last year. That represented the strongest opening period for fees since 2007.
JPMorgan’s non-interest expenses rose 8.5 percent to $15.02 billion.
Up to Wednesday’s close, JPMorgan’s shares had gained 22% since the presidential election on hopes of simpler regulation and tax cuts under the Donald Trump administration. The rally in bank stocks, however, has lost momentum lately as investors scale back some of those expectations.