New tax law helps JPMorgan post record profit

Higher interest rates also a factor, but credit quality is a concern.

NEW YORK — Wall Street giant JPMorgan Chase & Co. reported the highest quarterly profit in its history Friday, with a big assist from the new tax law passed late last year.

JPMorgan Chase, the nation’s largest bank by assets and deposits, had a profit of $8.71 billion in the first quarter, a jump of 35 percent from a profit of $6.45 billion in the same period a year earlier.

On a per-share basis, JPMorgan earned $2.37 a share, up from $1.65 per share, beating analysts’ forecasts.

So far for the year, JPMorgan shares are up about 3 percent.

JPMorgan’s results were driven by two factors: higher interest rates, which have allowed banks such as JPMorgan to charge more for customers to borrow, and a much lower corporate tax rate.

On the other side, JPMorgan had to set aside more money to cover bad loans in its consumer bank, where delinquencies have been steadily edging higher.

While JPMorgan’s pretax income rose by $2 billion in the quarter, the company said it effectively paid $240 million less in taxes compared to a year earlier.

The bank’s effective tax rate was 18.3 percent in the quarter, compared with the 22.7 percent effective tax rate it paid a year earlier.

Before the new tax law, JPMorgan’s average tax rate was in the high 20 percent range.

JPMorgan Chief Executive Officer Jamie Dimon has been a big promoter of the new tax law, saying it would be good for businesses as well average Americans.

Soon after President Donald Trump signed the law into place, the bank announced higher sal-

aries for most of its retail bank employees, and said it would open branches in a handful of new markets.

“The global economy continues to do well, and we remain optimistic about the positive impact of tax reform in the U.S. as business sentiment remains upbeat, and consumers benefit from job and wage growth,” Dimon in a statement.

Rising interest rates helped as well. The Federal Reserve has been steadily raising interest rates for more than two years. Net interest income at JPMorgan was $13.3 billion, up 10 percent from a year earlier.

JPMorgan’s investment bank also had a solid quarter, helped by much more volatile and active markets last quarter. Net income in the investment bank was $3.97 billion, up from $3.24 billion a year earlier.

There were some concerns about JPMorgan’s credit quality, however. The bank had to set aside more money to cover potentially bad loans, and the bank’s total charge-off rate — the percentage of loans it expects are not likely to be repaid — climbed to 1.20 percent of all loans. That compares to 1.07 percent of loans in the second quarter of 2017.

JPMorgan’s quarterly revenue was $28.52 billion, up from $25.85 billion.