JPMorgan Chase (JPM 108.37, +0.24, +0.22%) held a pre-market gain of
1.6% after modestly beating earnings expectations for the third quarter.
The banking giant reported above-consensus third quarter earnings of $2.34 per share on a 7.8% year/year increase in revenue to $27.3 bln, which was a bit shy of expectations.
Average core loans increased 6% year/year firmwide while average core loans in Corporate Client Banking also increased 6%. Corporate Client Banking average deposits increased 4% to $674 bln.
The bank reported a Tier 1 capital ratio of 12.0%, down from 12.5% one year ago, but up from 11.9% reported in the previous quarter.
Overhead ratio decreased to 57% from 58% in the previous quarter. One year ago, the overhead ratio stood at 55%. Reported expense increased to $15.6 bln from $14.4 bln one year ago.
Net interest income grew 7% to $14.1 bln due to higher rates, which offset lower Markets net interest income. Noninterest revenue increased 3% to $13.8 bln due to higher Markets net noninterest revenue and auto lease income.
In the Consumer & Community Banking segment, Consumer & Business Banking revenue grew 18.1% year/year to $6.39 bln due to higher net interest income, resulting from higher deposit margins and balance growth.
Home Lending revenue decreased 16.2% to $1.31 bln due to lower net servicing revenue and loan spread/production margin compression.
Card, Merchant Services & Auto revenue increased 10.5% to $5.60 bln. Higher Card net interest income on margin expansion and loan growth, higher auto lease volumes, and higher Card noninterest revenue outweighed lower net interchange income.
Provision for credit losses decreased by $537 mln to $980 mln. The decline was due to a $100 mln net reserve release in the current quarter, a $300 mln build in the Card portfolio in the previous year, and a $250 mln release in the Home Lending purchased credit-impaired portfolio. The declines offset a $150 mln build in Card driven by loan growth and higher loss rates.
In the Corporate & Investment Bank segment, net revenue increased 2.2% to $8.81 bln. The growth was owed to a 4.0% increase in Banking revenue (to $3.25 bln) and a 1.2% increase in Markets & Investor Services revenue (to $5.56 bln). Noninterest expense increased 8.0% to $5.18 bln.
JPMorgan Chase reaffirmed its expectations for fiscal year net interest income of about $55.5 bln and adjusted expenses of roughly $63.5 bln. Average core loans, excluding corporate and investment bank loans, are expected to increase between 6.0% and 7.0% for fiscal 2018.
- OUR VIEW
- LEARNING CENTER