JPMorgan Chase retained its crown as Wall Street’s darling in the third quarter, defying the gloom around its role in troubled listings such as WeWork to report increased profits as rivals struggled.
Net income and revenue at JPMorgan rose 8 per cent in the third quarter, which included its best-ever third quarter for investment banking fees. Earnings per share at the biggest US bank came in at $2.68, versus $2.34 a year ago and the $2.45 expected by analysts polled by Bloomberg. Shares rose 2 per cent when trading opened.
On the same day, Goldman Sachs posted a worse-than-expected fall in profits — partly because of losses on investments including WeWork — rival Citigroup reported flat earnings and profits and Wells Fargo’s profits fell sharply on litigation costs and slow growth.
“It looks like JPMorgan is gaining share,” said Mike Mayo, analyst at Wells Fargo. “JPMorgan is best in class of global banks and it shows this quarter.”
JPMorgan was the lead manager in WeWork’s catastrophic initial public offering, and faced a barrage of questions on whether the bank had done adequate due diligence on the office rental specialist, which is in talks with SoftBank over a potential deal.
Chief executive Jamie Dimon repeatedly declined to comment on the bank’s relationship with WeWork, but finance chief Jenn Piepszak said the financial impact of the group’s situation was “not material” for JPMorgan and “within our risk appetite”.
“We continue to support our client through a complex situation and are working with them through alternative financing strategies,” she said.
Investment banking, the division that handled the WeWork IPO, posted its best-ever third quarter in the three months to the end of September, as revenues rose 8 per cent to $1.9bn.
Other IPOs, including fitness firm Peloton, suffered steep post-listing declines, prompting fears that other companies would be reluctant to list in the coming weeks and months.
Ms Piepszak said that JPMorgan’s pipeline for investment banking deals “looks quite healthy”, though fees in the fourth quarter would be lower than in the third quarter, and below where they were in the fourth quarter of 2018.
“Investors are recalibrating their risk tolerance and looking for a path to profitability,” she said.
Other parts of the bank also performed strongly, which Mr Dimon said demonstrated
“broad-based strength and the resilience of our business model despite a more challenging interest rate backdrop”. However, he struck a note of caution for the future, warning that US economic growth had “slowed slightly”.
Average loans in JPMorgan’s consumer bank fell 4 per cent in the third quarter, while home lending was down 12 per cent. Credit card sales volumes were up 10 per cent. Net interest income rose 2 per cent, to $14.4bn, and the bank slightly improved its guidance for full-year net interest income.
“The consumer is not under strain,” Mr Dimon said. “The consumer is doing fine.”
In the investment bank, markets revenues were up 14 per cent year on year, consistent with Mr Dimon’s previous guidance of a double-digit rise. Fixed-income revenues were up 25 per cent, to $3.6bn, against a previous year that suffered from “less favourable market conditions”, JPMorgan said.
Shares in JPMorgan have risen 19 per cent this year.
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