JPMorgan Chase beats analysts’ estimates as bank releases $5.2 billion in loan loss reserves

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JPMorgan Chase CEO Jamie Dimon speaks at the North America’s Building Trades Unions (NABTU) 2019 legislative conference in Washington, April 9, 2019.
Jeenah Moon | Reuters

JPMorgan Chase reported first-quarter profit and revenue that exceeded analysts’ expectations on robust trading revenue and as the firm released $5.2 billion it had set aside for loan losses that ultimately did not occur.

Here are the numbers:

Earnings: $4.50 per share, vs. $3.10 per share expected by analysts polled by Refinitiv.
Revenue: $33.12 billion, vs. $30.52 billion expected.

JPMorgan Chase, the first major bank to report first-quarter earnings, will be closely watched for clues as to how the industry will emerge from the coronavirus pandemic.

One key question is whether banks will continue to release loan loss reserves — and the magnitude of those releases — that are no longer needed as the U.S. economic recovery gains pace. In the fourth quarter, JPMorgan beat expectations in part by releasing $2.9 billion in reserves.  

JPMorgan, with the world’s biggest Wall Street division by revenue, is also expected to benefit from robust investment banking fees driven by record issuance of SPACs, the blank check companies that saw more activity in the first quarter than all of 2020, itself a record year. Trading revenue is also expected to be a tailwind in the quarter.

Analysts will also be curious about the pace of share repurchases the bank is expected to make. Last month, the Federal Reserve said banks that pass the industry’s 2021 stress test will be allowed to resume higher levels of dividend payouts and buybacks starting June 30.

Shares of JPMorgan rose 21% so far this year, compared to the 25% advance of the KBW Bank Index.

This story is developing. Please check back for updates.

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