JPMorgan smashes profit estimates on M&A boom, wealth management strength

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(Businesshala) – JPMorgan Chase & Co on Wednesday reported a more than expected jump of 24% in third-quarter profit, fueled by a global dealmaking boom and its wealth management arm.

FILE PHOTO: A view of the exterior of JPMorgan Chase & Company’s corporate headquarters on May 20, 2015 in New York City. Businesshala/Mike Seger

The bank, whose fortunes reflect the health of the US economy, said strong M&A activity offset the slowdown in business. Its consumer bank also reported a strong quarter as credit card spending increased and customers paid off loans at a slower rate, meaning the bank earned more interest income.

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JPMorgan also issued $2.1 billion from its credit reserves during the quarter.

Banks were forced to set aside billions last year for possible loan defaults during the pandemic. But a consumer-friendly monetary policy and stimulus checks increased spending for the average American consumer and increased their savings, allowing banks to release some of their reserve capital.

JPMorgan’s net income rose to $11.7 billion, or $3.74 per share, for the quarter ended September 30, compared to $9.4 billion, or $2.92 per share, a year ago.

Analysts had expected earnings of $3.00 per share on average, according to Refinitiv.

Wall Street banking has remained strong for most of the past year, as big, cash-flush financial sponsors and corporates embark on a dealmaking spree, helping drive investment banking fees at Wall Street’s biggest banks to record levels Is.

Total reported revenue increased 1% to $29.65 billion in the quarter.

Higher management fees in the division that manages funds for large institutions and individual investors led to a 21% increase in net revenue in the bank’s asset and wealth management division.

Investment banking revenue rose 45% to $3 billion.

Other big US banks, including Bank of America, Citigroup, Wells Fargo and Morgan Stanley, will report results on Thursday, while Wall Street’s leading investment bank Goldman Sachs wraps up earnings season on Friday.

dealmaking frenzy

With global investment banking fees hitting an all-time record in the first half of the year, banks like JPMorgan have made the most of the bargain boom.

The largest U.S. corporations have benefited from booming stock markets, which have raised their valuations and allowed them to use stock as an acquisition currency, while also seeking to raise debt and negotiate deals. Have used the big investment banks for advice.

According to Refinitiv, during the quarter, JPMorgan maintained its position as the banking world’s second-largest provider of M&A advisories worldwide, behind Goldman Sachs. League tables rank financial services firms based on the amount of M&A fees they generate.

High levels of fundraising, debt refinancing, convertible bond deals and stock sales also fueled investment banking.

However, JPMorgan’s trading organization saw a slowdown in activity and did not reach previous quarter’s highs, exacerbated by unprecedented volatility in financial markets and a “meme stock”-fueled trading frenzy.

Overall, market and securities services revenue fell 4% to $7.5 billion, with fixed income trading falling 20% ​​to $3.7 billion. However, equity market revenue jumped 30 per cent.

Reporting by Anirban Sen in Bengaluru and Elizabeth Dilts in New York; Additional reporting by Noor Zainab Rizvi; Editing by Soumyadev Chakraborty


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