The third quarter of 2020 JPMorgan Chase greatly exceeded the forecasts of wall street on the back of higher income from trading operations and reduce reserves to cover defaults on loans. The Bank’s actions and its forecasts for a decline of unemployment shows greater optimism about the prospects of the U.S. economy.
Shares of JPMorgan Chase (JPM), which fell by 26.5% since the beginning of the year, rose 1.2% to open trading on Tuesday after the company reported fiscal third quarter results (ended September 30), surpassed the average of the analytical expectations.
Today, JPMorgan Chase reported an increase in earnings per share by 9% (compared value) to $2,92, or $0,69 better than analyst estimates of $2,23. The amount of the quarterly profit of the Bank grew to $9,44 billion from $9.1 billion a year earlier.
Total income decreased 1% to $29.1 billion, also above analytical estimates in $billion. 28,29 to See the quarterly history of revenue and profits JPMorgan Chase for the last 2 years can link.
JPMorgan is the first among the largest U.S. Bank reported quarterly results, so market analysts and investors traditionally look back on it as a forecast for the rest.
Its financial report today also publishes Citigroup (C), expected on Wednesday reports Goldman Sachs (GS), Wells Fargo (WFC) and Bank of America Corp (BAC), the report Morgan Stanley (MS) is scheduled for Thursday.
The main drivers of profit growth JPMorgan in Q3 was the increase in income from trading operations 30% to $6.6 billion, which was higher than $6,15 billion predicted by analysts, and aided by market volatility.
Investment bankers, the company received $2.2 billion in advising on mergers and underwriting stocks and bonds, which is 9% higher than last year and more than analysts had expected. The recovery of activity of the IPO on the stock markets helped professionals JPMorgan to $732 million – the best result of the third quarter in history.
The largest U.S. lender also dramatically reduced the amount allocated to cover future losses due to defaults on loans – up to $611 million, which is very different from $10.5 billion, which he pointed out in the previous quarter. Barclays analyst Jason Goldberg expected that JPMorgan will increase the reserves in the third quarter to $857 million.
Market experts said that the move JPMorgan can be regarded as a certain increase in optimism about future economic recovery in the United States. In addition, experts JPMorgan recently improved its forecasts for unemployment in the US at the end of the year to 9.5% from 10.9% in the second quarter and expect that by the end of next year this figure will fall to 7.3%.
At the same time, JPMorgan CEO Jamie Dimon noted that the total size of Bank reserves to cover loan losses remains at $34 billion, which corresponds to the level of the previous quarter.
In a comment to the report, Dimon pointed to the need to maintain reserves, “given the significant economic uncertainty and a wide range of potential risks” associated with the pandemic coronavirus.
Earnings per share JPMorgan could be above $0.17, but the Bank has written off expenditures of $524 million related to a record fine of $920 million to settle investigations by Federal agencies regarding its role in manipulating global markets metals and Treasury securities.
Marketinfo.pro wrote more about this in the article “JPMorgan Chase faces a fine of $1 billion in fraudulent trades”.
The Bank maintained its annual profit forecast of $55 billion and stated that annual costs will be about $66 billion, which corresponds to the forecast presented a month ago.
JPMorgan also extended the suspension of share repurchases, at least until the end of the year, citing unprecedented demand Federal reserve that major U.S. lenders have suspended the buyback at the moment.