Lower taxes boost JPMorgan profit 18%

Results by the New York-based bank beat analysts’ expectations for earnings of $2.22 a share

JPMorgan Chase’s secondquarter profits rose by 18 per cent from a year ago, as the nation’s largest bank continues to benefit from higher interest rates and a lower tax bill following last year’s passage of President Donald Trump’s tax law.

JPMorgan earned $8.32 billion (Dh30.53 billion) in the first quarter, or $2.29 a share, up from $7.03 billion, or $1.82 a share, in the same period a year earlier. The results by the New York-based bank beat analysts’ expectations for earnings of $2.22 a share.

Like in the first quarter, JPMorgan benefited greatly from a much lower tax bill compared to a year earlier. While pretax profits rose by $823 million, saw its tax bill drop by roughly 17 per cent in the quarter compared to a year earlier. The bank’s effective tax rate was 21 per cent, compared with 28 per cent in the prior quarter.

JPMorgan also continued to benefit from the growth of the US economy and good health of the US consumer. The bank grew loans and assets, and with higher interest rates, was able to charge borrowers more money. The average net yield on interest-earnings assets — basically the profit margin of a bank which compares how much it costs the bank to lend the money and how much the bank earns on it — climbed to 2.46 per cent in the quarter compared with 2.31 per cent a year earlier. This is despite the bank paying depositors more to keep their assets at the bank.

JPMorgan’s investment banking business posted an 18-per-cent increase in profits compared with a year earlier, helped by higher trading revenue in both stocks and fixedincome assets.

Total revenue was $28.39 billion, up from $26.67 billion a year earlier.