Instant View: JPMorgan Q3 profit jumps on lower loan losses

NEW YORK (BestGrowthStock) – JPMorgan Chase & Co (JPM.N: ), the second largest U.S. bank by assets, said its quarterly profit jumped, helped by lower loan losses in its retail and credit card units.

Third-quarter net income rose to $4.4 billion, or $1.01 a share, from $3.6 billion, or 82 cents a share in the year earlier period.

The earnings beat the average analyst EPS forecast of 90 cents a share, according to Thomson Reuters I/B/E/S.

JPMorgan shares were up 1 percent at $40.80 in pre-market trading on Wednesday.

The following is reaction from industry analysts and investors:

JOSHUA RAYMOND, STRATEGIST, CITY INDEX, LONDON

“The results from JPMorgan are positive for the markets. EPS was better than the market had expected by as much as 12 percent and aligned with Intel’s positive sales forecast last night is helping to set a positive tone for the earnings season as a whole.”

PHILIPPE GIJSELS, HEAD OF RESEARCH, BNP PARIBAS FORTIS GLOBAL MARKETS, BRUSSELS

“JPMorgan profits were higher than expected. Revenues were on the low side. A big contribution to the comparison was that there were fewer provision for bad credits. This shows on the one hand that there is more confidence in the future. However, if the economy was to deteriorate again, this figure will once again have to rise. JPM will also hire about 10,000 people, which is probably also contributing to the overall market sentiment. “

MARK ROBERTS, BANKS SPECIALIST SALES, SOCIETE GENERALE, LONDON

“(The) EPS numbers are better. Mostly driven by lower than expected credit costs in mortgages and credit cards. Against that, the net interest margin, which probably peaked in half one, is coming off the top, as I think they probably struggled to replace high-yielding assets as they rolled off the book.”

KOEN DE LEUS, ECONOMIST, KBC SECURITIES, BRUSSELS

“Overall, it’s a positive surprise. People were very afraid of earnings of financial institutions, but after the publication of JPMorgan results, it seems that people were too much worried. May be we could see a relief rally in stock markets.”

MICHAEL HEWSON, MARKET ANALYST AT CMC MARKETS, LONDON

“Above expectations…The majority of the profits appear to be from their investment banking division.”

“They’re fairly upbeat figures. What they need to do now is get their bad debt levels down with respect to their credit card debts.”

STEFAN DE SCHUTTER, TRADER, ALPHA TRADING, FRANKFURT

“The topline figures generally look a little bit more promising than last quarter. Although the outlook is still a little bit mixed, the mood is generally ok. It is perhaps healthy that there is still some caution with regard to the future.”

“Overall I think the outlook may have been a little bit more downbeat than expected, but not drastically. I am not very surprised and think that the numbers are generally in-line with expectations.”

HEINO RULAND, ANALYS, RULAND RESEARCH, FRANKFURT

“The figures are certainly better than expected and the falling bankruptcy ratio, which is also reflected in these figures, is also a very promising sign for the whole sector.”

MIC MILLS, HEAD OF ELECTRONIC TRADING, ETX CAPITAL, LONDON

“JPMorgan earnings have topped the forecasts, well above the rumored number, with retail and credit card business good, but its investment business not so great. It’s not having a stand-out market reaction, with UK banks under pressure from cash-raising concerns, but it should bode well for the sector earnings to come,”

PHILIP LAWLOR, INVESTMENT STRATEGIST, SMITH & WILLIAMSON, LONDON

“For banks, big benefit was very steep yield curve. We know that the run down of loan loss provisions was the big driver up to the last quarter. The key thing for banks is to show they can deliver growth irrespective those macro elements now.

MICHAEL HOLLAND, MONEY MANAGER, HOLLAND & CO, NEW YORK

“Overall, the basic business is challenging, but they are doing a great job. I don’t think this franchise can be any better managed than what they are doing. That’s what those numbers say to me.”

“I think they’ve set the bar extremely high. What they’ve said is that in this tough environment they are the A team and it is going to make it very tough for the rest of them to live up to it.”

MATT MCCORMICK, PORTFOLIO MANAGER, BAHL & GAYNOR INVESTMENT COUNSEL, INC., CINCINNATI:

“This release appears to be moderately positive. What the market is going to focus on is the improvement in the credit card chargeoffs. No one was expecting a dramatic increase in investment banking, but we weren’t expecting to see a dramatic improvement in credit cards. The main thing I’m worried about with JPMorgan now is the moratorium on foreclosures, and what the likely impact will be.

“JPMorgan is often seen as being a harbinger of other banks, but JPMorgan is not other banks — it has excellent management, a strong balance sheet, and they have far fewer mortgages than Bank of America. I would like to see what Dimon says about financial regulation. Regulatory risk is still there, and they’re waiting like everyone else to see what changes will happen. I would love to see more about when they will increase the dividend, too.”

JOERG RAHN, CHIEF INVESTMENT OFFICER AT MARCARD, STEIN & CO, HAMBURG:

“JPMorgan’s results show that the earnings season remains robust. But one has to keep in mind that much of the future performance also depends on the recovery of the U.S. economy. But overall, the company’s good results show that the trough has been passed and that the risk for negative future surprises has been reduced.”

(Reporting by Christoph Steitz, Josie Cox and Kirsti Knolle

in Frankfurt, Jon Hopkins, Dominic Lau, Simon Jessop, Atul Prakash, Tricia Wright and Simon Falush in London and Dan Wilchins and Steve Eder in New York)

Instant View: JPMorgan Q3 profit jumps on lower loan losses