JPMorgan Q3 Profit Down 2%, But Results Top Estimates

(RTTNews) - US investment bank JPMorgan Chase & Co. (JPM) reported Friday a net profit for the third quarter that decreased 2 percent from last year, reflecting higher provision for credit losses, despite a 7 percent revenue growth. However, both earnings per share and revenues for the quarter topped analysts' expectations.

In pre-market activity on the NYSE, JPM shares are trading at $217.39, up $4.55 or 2.14 percent.

"The Firm reported strong underlying business and financial results in the third quarter, generating net income of $12.9 billion and an ROTCE of 19%," said Chairman and CEO Jamie Dimon.

For the third quarter, net income decreased 2 percent to $12.90 billion from $13.15 billion in the prior-year quarter, while earnings per share grew 1 percent to $4.37 from last year's $4.33.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $4.01 per share for the quarter. Analysts' estimates typically exclude special items.

The provision for credit losses was $3.11 billion, reflecting a net reserve build of $1.0 million and net charge-offs of $2.1 billion, up 125 percent from last year's $1.38 billion.

Total net revenue on a reported basis grew 7 percent to $42.65 billion from last year. On a managed basis, net revenue was $43.32 billion, up 6 percent from $40.69 billion in the same quarter last year. The Street expected revenues of $41.63 billion for the quarter.

Net interest income was $23.5 billion, up 3 percent or up 1 percent excluding Markets, driven by the impact of balance sheet mix and securities reinvestment, higher revolving balances in Card Services and higher wholesale deposit balances. This was predominantly offset by lower deposit balances in CCB and deposit margin compression across the lines of business.

Non-interest revenue excluding Markets $12.7 billion, up 17 percent, driven by lower net investment securities losses compared to the prior year, higher asset management fees in AWM and CCB and higher investment banking fees.

Noninterest expense was $22.57 billion, up 4 percent, driven by higher compensation, including higher revenue-related compensation and growth in employees, partially offset by lower legal expense.

Banking & Wealth Management net revenue was $10.09 billion, down 11 percent, driven by lower net interest income on deposit margin compression and lower deposit balances, partially offset by higher asset management fees in J.P. Morgan Wealth Management.

Card Services & Auto net revenue was $6.41 billion, up 11 percent, driven by Card Services, reflecting higher net interest income on higher revolving balances.

Banking & Payments net revenue increased 8 percent to $8.65 billion, and Markets & Securities Services net revenue also grew 8 percent to $8.37 billion from last year.

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