JP Morgan Chase announces Q3 Earnings; beats estimates

JP Morgan Chase

JP Morgan Chase ($JPM) announced its third quarter earnings on Wednesday before the market opened.  

  • Revenue: $29.64 billion  
  • EPS:  $3.74
  • Net Income : $11.7 billion
Other Significant Details
  • Managed revenue of $30.4 billion  
  • Credit costs net benefit of $1.5 billion included $2.1 billion of net reserve release and $524 million of net charge-offs 
  • Average loans up 5%; average deposits up 19% n $1.6 trillion of liquidity sources, including HQLA and unencumbered marketable securities 
  • Average deposits up 20%; client investment assets up 29%  
  • Average loans down 2% YoY and up 1% QoQ; Card net charge-off rate of 1.39%  
CEO’s Statement: JP Morgan Chase

Jamie Dimon, Chairman and CEO, commented on the financial results: “JPMorgan Chase delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions. We released credit reserves of $2.1 billion, as the economic outlook continues to improve and our scenarios have improved accordingly.

As we have said before, however, we do not consider these scenario-driven releases core or recurring profits. These reserve calculations, while done extremely diligently and carefully, involve multiple, multi-year hypothetical probability-adjusted scenarios, which may or may not occur and which may continue to introduce quarterly volatility in our reserves. Our earnings, not including the net reserve release and an income tax benefit, were $9.6 billion.”

Analysts estimates
  • Analysts estimate EPS of $2.98 vs. $2.92 in Q3 FY 2020.
  • Net interest margin is predicted to fall YOY, while rising modestly on a sequential basis.
  • Total revenue is expected to post minor gain YOY as the company slowly recovers from the financial impact of the COVID-19 pandemic.

The performance of the company is surely better than what was expected!

Earnings History of JPM

Despite a pandemic-dominated 2020, the stocks performed well in 2021. However, the net income was $11.7 billion, which is up by $2.2 billion compared to last year. The income has been largely driven by credit reserve releases of $2.1 billion compared to credit reserve releases of $569 million in the prior year. The current quarter included an income tax benefit of $566 million related to
finalizing the Firm’s 2020 U.S. federal tax return. The net income is still, a little less than the previous quarter.

Plans for the future 

Jamie Dimon, JPM’s CEO concluded the earnings press release by telling about the company’s future plans. He stated that the company is making important investments, including strategic, dd-on acquisitions that will drive the firm’s future prospects and position it to grow and prosper for decades.

JP Morgan Chase plans to open 400 branches in new markets by the end of 2022. They are halfway through with approximately 30% of these branches in low to moderate-income communities. They are also expanding their retail presence internationally, most recently launching their digital retail bank in the U.K.

JP Morgan’s stocks were bearish on Tuesday! It will be worth watching how they perform after the market opens on Wednesday.

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