JPMorgan Chase JPM 1.23% & Co. said Tuesday that its third-quarter profit rose 4%, a surprising result for the nation’s biggest bank during a recession that has hammered much of its business for the year.
The bank set aside just $611 million for potential future loan losses, far less than expected and the $10.47 billion it booked in the second quarter. Profit doubled from the second quarter.
The bank’s profit rose to $9.44 billion, or $2.92 a share, from $9.08 billion, or $2.68 a share, a year earlier. Analysts had expected $2.23 a share, according to FactSet.
Analysts and investors will look for the bank to detail what it expects for the economy in calls Tuesday morning. JPMorgan executives signaled three months ago that they were settling in for a long recession, growing more dour than they had been at the start of the pandemic. The slowing reserve build signals the bank believes it is already prepared for the losses that will come and it already started releasing some of the money it had put aside earlier this year.
The bank’s net charge-offs were $1.18 billion, down from both a year ago and the prior quarter, indicating that customers aren’t yet defaulting on their debts in large numbers. Banks including JPMorgan granted customers widespread payment reprieves on credit cards, auto loans and other debt earlier in the pandemic, but many of those grace periods have expired.
Revenue slipped to $29.15 billion from $29.29 billion a year ago. Analysts had expected it to fall to $28.22 billion.
JPMorgan shares have slumped 27% this year. That is slightly better than the KBW Nasdaq Bank Index, which is down 29%, but far worse than the broader market. The S&P 500 has rallied since a March slump and is now up about 9% for the year.
Shares rose 1.8% to $104.25 in premarket trading.
The bank was boosted by its investment banking operations. Companies this year have rushed to raise cash, refinance debt and sell stock to weather the recession, leading to a Wall Street boom.
Revenue in the corporate and investment bank rose 21% to $11.5 billion. Profit jumped 52% to $4.3 billion. Trading revenue rose 30%, topping the 20% increase Chief Financial Officer Jennifer Piepszak had forecast at a conference last month.
In the consumer bank, revenue fell 9% to $12.76 billion. Profit also fell 9%, to $3.87 billion, stung by lower interest rates that hurt its margins on lending.
The bank set aside $794 million to cover potential losses on soured consumer loans, down from $5.83 billion in the second quarter. That helped the consumer bank recover from a loss in the second quarter.
The commercial bank’s profit rose 15%. In asset and wealth management, profit rose 31%.
JPMorgan continued to see a surge in deposits in the quarter, as nervous customers hoard cash. Total deposits were up above $2 trillion for the first time, from $1.525 trillion a year ago.
Write to David Benoit at [email protected]
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