A sign outside the headquarters of JPMorgan Chase & Co. in New York.MIKE SEGAR/Reuters
JPMorgan Chase & Co., the biggest U.S. bank, swung to a third-quarter profit from a year earlier as a surprise gain in fixed-income trading helped boost revenue and legal costs narrowed.
Net income was $5.6-billion, or $1.36 a share, compared with a loss of $380-million, or 17 cents, a year earlier, the New York-based lender said today in a statement. Legal costs cut earnings by 26 cents a share, or $1-billion, more than some analysts predicted. The average estimate of 27 analysts surveyed by Bloomberg was for adjusted earnings of $1.39 per share, with forecasts ranging from $1.30 to $1.50.
Chief Executive Officer Jamie Dimon, 58, has been contending with climbing expenses as the bank bolsters regulatory compliance and computer security. Revenue beat analysts' estimates, helped by higher-than-expected fixed-income trading revenue.
"If you look at the printed number, it is showing a miss, but all businesses are doing relatively well," said Guy de Blonay, a London-based fund manager at Jupiter Asset Management Ltd. that owns JPMorgan shares. "For example, the investment bank is doing better."
Revenue in the quarter rose 5.4 per cent to $25.2-billion, beating that average estimate of $24.4-billion from 10 analysts. Fixed-income trading revenue rose 2 per cent to $3.5-billion, fuelled by strength in currencies and emerging markets, beating the $3.2-billion estimate from David Konrad, Macquarie Group Ltd.'s head of U.S. bank research.
The earnings report was released online hours before the scheduled time. The stock was little changed at $58.10 at 7:04 a.m. in New York from yesterday's closing price of $58.16.
JPMorgan, the biggest fixed-income trading firm, is grappling with sluggish activity in that market caused by central bank intervention. While Chief Financial Officer Marianne Lake has said low client volume will probably continue through the middle of 2015, fixed-income trading may have gotten a boost as volatility increased in the final weeks of the quarter.
"Despite challenges, we have continued to deliver strong underlying performance, maintain our fortress balance sheet and liquidity, simplify the business and adapt to regulatory changes," Dimon said in the statement.
Last week, Dimon made his first public appearance since undergoing eight weeks of treatment for throat cancer, a condition he disclosed in July, and he may address questions about his prognosis today.
Dimon said in the Oct. 10 panel discussion that JPMorgan will probably double its $250-million annual cyber-security budget within five years. The bank disclosed Oct. 2 that hackers had obtained contact information of 76 million households and 7 million small businesses, while adding that account numbers and passwords weren't compromised.
Dimon has been "shockingly present" at the bank's New York offices during his treatment and heavily involved in management, Lake said at a Sept. 9 conference. The company is prepared for any scenario, Dimon said in July.
JPMorgan's quarterly loss a year ago, caused by $7.2-billion in legal and regulatory expenses, was the sole deficit reported by the bank since Dimon took over in 2006.
Citigroup Inc., the third-largest U.S. bank, and Wells Fargo & Co., the biggest mortgage lender, report results later today. Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley report later this week.
Fuelled by JPMorgan's rebound, the six banks probably will post $15.9-billion in combined third-quarter profit, a 19 per cent increase from the previous year, according to the average of analysts' estimates compiled by Bloomberg.