JPMorgan Chase & Co. (NYSE: JPM) kicked off third-quarter earnings season for U.S. banks on a high note on Friday, reporting an earnings beat on better-than-expected retail banking revenue. An uptick in net interest margin also eased investor fears, and analysts say J.P. Morgan remains among the top U.S. bank stock investments.
JPM stock initially traded higher Friday morning before giving up its gains.
JPMorgan reported third-quarter adjusted earnings per share of $2.34 on revenue of $27.8 billion. Both numbers topped consensus analyst estimates of $2.25 and $27.5 billion, respectively. Revenue was up 5 percent from a year ago.
The revenue beat was driven by the JPMorgan’s consumer and business banking unit, which generated $6.38 billion in revenue, up 18 percent from a year ago. Consumer banking profits were up 60 percent to $4.09 billion.
Average core loans were up 6 percent company-wide, and the company’s provision for loan losses dropped from $1.5 billion a year ago to just $948 million in the third quarter.
Equity trading revenue of $1.6 billion beat analyst estimates of $1.43 billion. Strength in equity trading helped offset a disappointing $2.84 billion in fixed income revenue, which missed consensus estimates of $2.96 billion.
Perhaps the most bullish JPM news from the third quarter is that net interest margin increased by 0.5 percent quarter-over-quarter to 2.51 percent. NIM beat consensus estimates of 2.50 and reassured investors who were concerned about shrinking margins in the second quarter.
“The U.S. and the global economy continue to show strength, despite increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy,” CEO Jamie Dimon says in a statement.
Bank of America analyst Erika Najarian says the consumer and community banking numbers, including a 5 percent increase in card balances, are a positive sign for JPMorgan.
“All in all, [consumer and community banking] results affirm…
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!