JPMorgan beats profit forecasts, helped by interest rates
Posted April 13
NEW YORK — JPMorgan Chase reported first-quarter earnings that easily beat analysts' estimates Thursday, helped by a steady climb in interest rates from a year earlier as well as gains in investment banking.
The nation's largest bank by assets reported net income of $6.45 billion, or $1.65 per share, compared with net income of $5.52 billion, or $1.35 a share from a year earlier. Analysts surveyed by FactSet expected the bank to earn $1.51 a share.
As expected, JPMorgan's bottom line benefited directly from the Federal Reserve's push to raise interest rates over the past year. Net revenue on a managed basis were $25.59 billion compared with $24.08 billion in the same period a year earlier.
Interest income rose $12.39 billion compared with $11.67 billion a year ago. Wells Fargo and Citigroup, who also reported their quarterly results on Thursday, also reported higher interest income in the first quarter.
The bank also reported solid loan growth in the quarter across both its consumer and business lending businesses.
"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," JPMorgan CEO Jamie Dimon said in a prepared statement.
JPMorgan's investment banking division also did well, reporting net income of $3.24 billion compared with $1.98 billion in the same period a year earlier. Investment banking revenue rose 34 percent from year earlier, while JPMorgan's trading division saw a 14 percent rise in revenues from a year earlier, helped especially by bond trading.
One area that investors will watch in coming months is JPMorgan's credit card business. In recent months, JPMorgan has introduced new products and executives have talked openly about "opening up the credit box," which is banker talk for lending money to people with lower credit scores. It opens JPMorgan to issue credit cards to potentially more customers, but at the same time, exposes the bank to more risk.
Average credit card loans at JPMorgan rose to $137.2 billion in the first quarter, compared with $127.3 billion from a year earlier. Meanwhile the bank's charge-off rate for credit cards rose noticeably, from 2.62 percent to 2.94 percent. However, the bank said that increase in charge-offs was in line with expectations.
JPMorgan's stock rose $1.17, or 1.4 percent, to $86.54 in early trading.