JPMorgan Easily Beats Estimates

JPMorgan Chase ($JPM) reported its Q3 earnings this morning and as I expected, they easily surpassed Wall Street’s consensus. For July, August and September, the bank raked in $5.7 billion or $1.40 per share which was 18 cents above the Street’s forecast. Profits were up 34% and revenues rose 6% to $25.9 billion. The Street had been expecting $24.5 billion for the top line.

More good news is that the losses from the London Whale debacle are basically ending. JPM execs said that the trade is still unwinding and the red ink has been reduced to a “modest” loss for Q3. All told, the trade cost them $6.2 billion. JPM said that core loans rose by 10% and mortgages were up by 29%. Overall, this was a very good quarter for JPM.

“I would hope for America’s sake we start to fix the things that make the mortgage underwriting too tight,” Mr. Dimon said on a conference call with reporters.

Throughout its core lending businesses, JPMorgan showed signs of strength. The commercial banking group reported record revenue. The volume of credit card sales jumped 11 percent over the previous year, bolstering the broader unit. The card services and auto business posted profits of $954 million, up 12 percent.

With the improving credit environment, JPMorgan set aside less money to cover potential losses. In the mortgage banking business, the bank cut the amount of reserves by $900 million. Across the bank, JPMorgan set aside $1.79 billion of such funds, compared with $2.41 billion a year earlier.

The stock gapped up earlier today but has since pulled back to the mid-$41 area which is where it was during the first part of this week.

Posted by on October 12th, 2012 at 1:04 pm


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