JPMorgan 3Q profits rise 24 per cent
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.