JPMorgan Chase (JPM), the largest US bank by assets, kicked off its third quarter earnings season for large banks on Tuesday, delivering stronger-than-expected results as the coronavirus outbreak continues to disrupt the global economy.
Here is the key data against expectations for the third quarter, according to analysts interviewed by Bloomberg.
Despite a COVID-19 crisis that is still disrupting the economy, the bank set aside $ 611 million in credit reserves for the quarter, far less than analysts predicted and down $ 903 million from the same quarter. a year ago. The company had set aside $ 1
JPMorgan earned $ 9.4 billion in net income on nearly $ 30 billion in revenue and held $ 34 billion in credit reserves in the face of “significant economic uncertainty and a wide range of potential outcomes,” he said. noted CEO Jamie Dimon.
In a phone call with reporters, CFO Jennifer Piepszak said the company considers “another round of stimuli just as important” to alleviate the pain and suffering experienced by many. He added that the bank takes no future stimulus in its current level of loan loss reserves, but another round would give the company “more confidence” in its reserve level.
“If a double dip occurs, there are many things that we would consider, and it is possible that today we should build our reserves beyond the base case,” Piepszak said.
Dimon added that the people who most need help with the stimulus are small businesses and the unemployed. The head of the bank noted that “a good and well-designed stimulus package will increase the chances of better outcomes.”
“There is so much uncertainty … We’re just saying it will increase the chances of good results,” Dimon said, which could impact JPMorgan’s profits and cash reserves.
“We don’t know the future. It’s all about probabilities and how we can book today,” explained Dimon. “We would like to maximize the chances of good results. We believe a decent stimulus package would be useful.”
During the quarter, JPMorgan’s bottom line was strengthened by strength in corporate and investment banking. Securities markets and services revenues increased 29% to $ 7.8 billion, with market revenues up 30% to $ 6.6 billion from a year ago. Fixed income trading revenues increased 29% to $ 4.6 billion, while equity trading rose 32% to $ 2 billion. Securities services revenues remained unchanged at $ 1 billion.
Banking revenues increased 6% to $ 3.7 billion, with investment banking revenues climbing 12% to $ 2.1 billion, driven by commission revenues up 9%.
Revenue from consumer and community banking services fell 9% from a year ago to $ 12.9 billion. Net income for consumer and community banking businesses also fell 9% to $ 3.9 billion.
Average deposits increased by 28%, while client investment assets increased by 11%. Average loans decreased by 7% and the volume of credit card sales decreased by 8%. Meanwhile, active mobile customers increased by 10%.
Engaged in a new HQ building
During the media call, Piepszak also commented on returning to the office during the COVID-19 pandemic, and he did so safely.
About 20% of the staff returned to the New York City and London offices. He noted that it should continue for the “foreseeable future”, although they will continue to monitor the situation and “will not hesitate to reverse course”.
As for the company’s plans to build a new headquarters on Park Avenue, those haven’t changed, according to Dimon. He noted that the building would house “maybe 14,000 people”.
“I expect New York headcount will likely decline over time. We have been building a headquarters for 50 years. It’s not a short-term decision, “he added.
He noticed that there is a lot of space to have fewer people in that building and keep it.
“We have a lot of leeway in how we manage our real estate over time,” said Dimon, noting that he thinks there will be work from home, possibly permanently, on a rotating basis or partially for some, but at the moment it is not. clear.
Elsewhere, in the financial supplement, the bank noted that the extended suspension of share buybacks will continue “at least until the end of 4Q20”.
Shares of JPMorgan last trading rose more than 1.5% in the pre-market to trade at $ 104.
Julia La Roche is a correspondent for Yahoo Finance. Follow her up Twitter.