JP­Mor­gan 3Q profits rise 24 per cent

The Guardian (Charlottetown) - - BUSINESS - BY KEN SWEET

JP­Mor­gan Chase & Co. said Fri­day that its third-quar­ter profits rose by 24 per cent from a year ago, helped by a lower tax bill and higher in­ter­est rates, which al­lowed it to charge more for loans to con­sumers and busi­nesses alike. That was enough to make up for a less-than-stel­lar quar­ter in its trad­ing busi­ness.

The New York-based bank said it earned $8.38 bil­lion in the first quar­ter, or $2.34 a share. That’s up from $6.73 bil­lion, or $1.76 a share, in the same pe­riod a year ear­lier. The re­sults beat the ex­pec­ta­tions of an­a­lysts, who were look­ing for JP­Mor­gan to earn $2.26 a share, ac­cord­ing to Fac­tSet.

“The U.S. and the global econ­omy con­tinue to show strength, de­spite in­creas­ing eco­nomic and geopo­lit­i­cal un­cer­tain­ties, which at some point in the fu­ture may have neg­a­tive ef­fects on the econ­omy,” said Jamie Di­mon, JP­Mor­gan’s chief ex­ec­u­tive and chair­man, in a state­ment.

In­vestors will care­fully watch re­sults from JP­Mor­gan and other big banks Fri­day. The U.S. stock mar­ket is com­ing off its worst two-day per­for­mance since Fe­bru­ary, and in­vestors want to see ev­i­dence that cor­po­rate profits re­main strong. JP­Mor­gan Chase’s shares were up slightly in pre­mar­ket trad­ing. The stock is up 1.1 per cent this year af­ter drop­ping more than 6 per cent dur­ing the mar­ket’s down­turn this week.

Like many banks, JP­Mor­gan has ben­e­fited greatly from the rise in in­ter­est rates in the past cou­ple of years. The bank’s net in­ter­est in­come rose by 9 per cent from a year ear­lier. While the bank had to pay more in­ter­est to de­pos­i­tors, it was more than able to make up for those higher costs by charg­ing more to bor­row­ers. The bank’s net in­ter­est spread, which is the dif­fer­ence be­tween how much a bank paid de­pos­i­tors for their funds and how much the bank charged to lend them out, was 2.24 per cent in the quar­ter, up from 2.19 per cent a year ear­lier.

The bank also con­tin­ues to ben­e­fit greatly from the Repub­li­can-passed tax law. Its ef­fec­tive tax rate was 21.6 per cent in the quar­ter, down from 29.6 per cent a year ear­lier.

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