Idea of the Day: JP Morgan results beat expectations on profits from property and trading

Shares in JP Morgan, the largest US bank by assets, rallied 2.5% on Thursday as the bank reported a 35%increase in first quarter net profit to $8.71 billion, beating analysts’ estimates.The rally comes at the end of a three-week upward streak leading up to the earnings release.

Shares in JP Morgan, the largest US bank by assets, rallied 2.5% on Thursday as the bank reported a 35%increase in first quarter net profit to $8.71 billion, beating analysts’ estimates.The rally comes at the end of a three-week upward streak leading up to the earnings release.

While impressive, the bank’s profit increase needs to be put into a little bit of perspective: the new US federal tax code introduced at the end of 2017 meant that banks like JPMorgan had to book multi-billion-dollar charges in their fourth quarter earnings which brought full year earnings down. The new tax law, however, will provide banks with long-term benefits which will be felt over the coming quarters.

Nevertheless JPMorgan’s profit growth clearly exceeded that of its peers and that of Wall Street overall where growth has been on average 17% in the first quarter. The bank’s biggest growth came from equity sales and trading which was 25% higher on the year. Fixed income, currency and commodity trading increased by 7% while banking revenue slipped 3%.

The bank’s chief executive Jamie Dimon said JPMorgan has been outpacing the industry on consumer deposit growth while attracting significant net new money and growing client investment assets by 13%.

Citigroup, Wells Fargo and two more US banks are reporting earnings Friday.


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.