FILE PHOTO -People walk by the JP Morgan & Chase Co. building in New York, U.S. on October 24, 2013. REUTERS/Eric Thayer/File Photo
NEW YORK: JPMorgan Chase & Co reported a 17% jump in quarterly profit on Thursday, topping analyst expectations as higher interest rates fueled trading activity and helped the largest US bank earn more from lending.
The Federal Reserve’s decision to hike rates in March for the second time in three months led investors to reposition portfolios, as did elections in Europe and news about Britain’s progress in leaving the European Union. That increased activity boosted first-quarter revenue in JPMorgan’s markets-related businesses, particularly fixed-income trading.
The bank also reported growth in loans and deposits and was able to earn more from lending as interest rates ticked higher.
However, its pace of loan growth, much like in the broader US banking industry, has slackened recently.
Wells Fargo & Co and Citigroup Inc also reported results on Thursday, with Citi showing similar gains in trading and Wells Fargo hurt by a slowdown in mortgage lending.
Overall, JPMorgan earned US$6.4bil (RM28.2bil) in the first quarter, or US$1.65 per share, up from US$5.5bil (RM24.3bil) , or US$1.35 per share a year earlier. The bank’s total net revenue rose 6% to US$24.7bil from US$23.2bil in the year-ago quarter.
Analysts had expected earnings of US$1.52 a share, according to Thomson Reuters I/B/E/S.
JPMorgan shares rose 0.5% to US$85.79 in premarket trading.
JPMorgan’s corporate and investment banking division, which includes the trading business, reported a 17% rise in revenue to US$9.5bil, the biggest gain among its four major business lines.
Weaker advisory fees were more than offset by gains in revenue from underwriting, securitised products, interest rate-related products, prime brokerage and corporate derivatives.
On a conference call with journalists, chief financial officer Marianne Lake said some customers decided to borrow by issuing bonds rather than taking out loans.
Mortgage borrowing was a dark spot in the bank’s results, with mortgage fees and loan servicing revenue tumbling 39% to US$406mil from US$667mil. Higher interest rates have dissuaded borrowers from refinancing, and JPMorgan executives had said in February they expected non-interest mortgage revenue to fall throughout the year.
Even so, the bank managed to grow its core book of loans by 9% on an annual basis and nearly 1% from the prior quarter. Its net interest income, an important measure of profitability that shows the difference between a bank’s cost of money and how much it receives for the funds, rose 6%.
In a statement, chief executive Jamie Dimon said US consumers and businesses are “healthy overall” and that the economy could further improve if the government pursues pro-growth initiatives. - Reuters
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