J.P. Morgan Chase (JPM) kicked off earnings season in the financial industry with a stronger-than-expected 33% leap in first-quarter profits on Friday thanks to rising investment-banking revenue.
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Shares of the largest U.S. bank by assets ticked lower in premarket-action as J.P. Morgan’s revenue only met Wall Street’s expectations.
The company said it earned $6.53 billion, or $1.59 a share, last quarter, compared with a profit of $4.92 billion, or $1.19 a share, a year earlier.
Excluding one-time items, it earned $1.41 a share, exceeding estimates by two pennies.
Adjusted-revenue slid 3.4% to $25.85 billion, essentially matching the Street’s view.
“All our businesses had strong performance, and our client franchises did exceptionally well,” CEO Jamie Dimon said in a statement.
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The year-earlier period was hurt by a charge of 12 cents a share tied to the London Whale trading debacle, which caused more than $6 billion in losses overall last year.
J.P. Morgan Chase’s results were also lifted by a 28% year-over-year jump in profits at its investment-banking arm to $2.61 billion. The company ranked No. 1 in fees, global debt and equity, syndicated loans and announced M&A during the first quarter.
The bank’s consumer and community banking arm suffered a 10.3% retreat in first-quarter profits to $2.6 billion as revenue dipped 6%. However, provisions for credit losses dropped to $549 million, compared with $642 million the year before and $1.1 billion in the fourth quarter. Allowances for loan-losses tumbled by $1.2 billion.
“We are seeing positive signs that the economy is healthy and getting stronger,” said Dimon, pointing to rising home prices and purchase activity. “The exception is that loan growth across the industry has been softer this quarter, although year-on-year growth remained strong. Small businesses remain cautious about the recovery and fiscal uncertainty, and are not investing their capital.”
J.P. Morgan said its mortgage banking net income slumped 31% year-over-year to $673 million as revenue dropped to $2.7 billion from $2.03 billion.
Like most big banks, J.P. Morgan continued to strengthen its balance sheet ahead of looming regulations requiring lenders to hold more capital. J.P. Morgan said its estimated Basel III Tier 1 common equity rose to 8.9% last quarter from 8.7% in the fourth quarter.
Shares of New York-based J.P. Morgan slipped 0.61% to $49.00 ahead of Friday’s opening bell. The stock had been up more than 12% on the year as of Thursday.