J.P. Morgan Chase & Co beat forecasts for revenues and profits on Friday as global bond and currency markets roared back to life in the third quarter following Britain's vote to leave the European Union. Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms boosted trading revenue by 21 percent for J.P. Morgan, the biggest US bank by assets, prompting pretax profit to jump by one-third.
J.P. Morgan's after-tax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. Both revenues and profits topped analysts' estimates. Earnings per share fell to $1.58 from $1.68 a year ago. Analysts, on average, expected $1.39, according to Thomson Reuters I/B/E/S. J.P. Morgan is the first big US bank to report third-quarter results and its performance gave Wall Street a shot in the arm.
The bank's shares were up 1.6 percent at $68.84 in premarket trading while markets-focused rivals, including Goldman Sachs, Morgan Stanley and Citi also rose. J.P. Morgan's total revenue rose 8 percent to $25.51 billion, beating the average estimate of $23.99 billion. With interest rates at record lows, the banking sector has relied on growing its loan book to boost income.
However, total provisions for bad loans rose 86.4 percent to $1.27 billion. J.P. Morgan posted higher provisions for losses as it added loans and recorded charge-offs for oil and gas loans. Core loans in its commercial banking business grew 14 percent. J.P. Morgan expects income from lending to be up modestly in the fourth quarter.