JPMorgan Chase third-quarter profits above estimates

JPMorgan Chase posted profit that beat analysts’ estimates on a 48 per cent surge in fixed-income revenue, fuelled by trading of government bonds after the UK voted to leave the EU.

Third-quarter net income declined to $6.29 billion (€5.71bn) , or $1.58 a share, from $6.8 billion (€6.18bn), or $1.68, a year earlier, when results got a boost from $2.2 billion in tax benefits, New York-based JPMorgan said on Friday in a statement.

Earnings excluding legal and accounting adjustments were $1.59 a share, topping the $1.39 average estimate.

JPMorgan, the biggest US bank, kicks off earnings season for the industry, offering insight into how Wall Street’s trading and advisory operations performed during the typically slow summer months.

Beset by low growth and low interest rates for years, banks suffered a weak start to 2016 as falling energy prices triggered an equity rout.

Bond trading recovered in the second quarter, driven by interest rate and currency desks, a trend that analysts expected to continue into the period ended September 30th.

Revenue rose to $25.5 billion (€23.16bn)), beating the $24.2 billion (€21.98bn) average estimate of 10 analysts surveyed by Bloomberg, while expenses fell 5.9 per cent to $14.5 billion, compared with the $14.1 billion estimate.

Revenue

Fixed-income trading revenue jumped to $4.33 billion, more than $1 billion higher than the average estimate of seven analysts surveyed by Bloomberg.

Equities-trading revenue advanced less than 1 per cent to $1.41 billion, compared with analysts’ $1.35 billion estimate.

Trading tied to government bonds and other assets linked to interest rates “was particularly strong with good client activity as markets remained active throughout the quarter post the Brexit vote and in anticipation of central bank actions” and changes in money-market regulation, the firm said.

Credit and securitised products desks gained on “improving market sentiment” and robust issuance, the bank said.

JPMorgan climbed 2 per cent to $69.09 in early trading in New York on Friday.

The stock had gained 2.6 per cent this year through Thursday, outpacing the 24-company KBW Bank Index, which fell 3 per cent.

– Bloomberg