It looks like there wasn’t anything wrong with JPMorgan Chase & Co. (NYSE:JPM) that a pickup in volatility couldn’t help.
JPMorgan earnings reported Tuesday beat Wall Street forecasts for only the second time in the last seven quarters, but they did so in reassuring fashion. Trading revenue did much of the heavy lifting — a welcome reversal after years of sleepy markets — but all major business lines chipped in as well.
As much as JPM has been hampered by legal costs over the past few years, that hasn’t been the big drag on the stock. Rather, it has been JPMorgan’s underwhelming profit and revenue growth in an economy that’s been stumbling along with softness in the housing market and weak demand for commercial loans, among other trends that are detrimental to banks.
A lack of action in the lucrative fixed income, currencies and commodities (FICC) markets caused trading revenue to slow to a trickle for quarter after quarter until recently.
Mergers and acquisitions and initial public offerings have a been a bright spot, but contributions from that segment couldn’t offset a lack of spark everywhere else.
JPM Hits All the Right Notes
Well, lo and behold, JPM earnings finally caught a break.
The nation’s biggest bank by assets had a huge quarter in trading as action, and volatility returned to the FICC and equity markets in the first quarter. The mortgage business picked up on a pullback in rates. Lending picked. For the first time in a long time, more things went right in a quarter than wrong.
If the bank can make a habit of this, you can be sure JPM stock will stock being such a market laggard.
For the first three months of the year, JPMorgan earnings came to $5.91 billion ($1.45 a share), up from $5.27 billion ($1.28 a share) a year ago and enough to beat the $1.40 per share forecast by analysts polled by Thomson Reuters. Revenue likewise exceeded Street views, rising 4.1% to $24.82 billion. That compares with analysts’ average estimate for $24.49 billion.
Trading revenue grew 9%. Merger advisory revenue increased 42%. Profits at the consumer bank rose 12%. Earnings from the mortgage division tripled year-over-year. Asset management delivered profit growth of 11%.
Commenters point out that the broad-based strength should quiet calls for JPM to break itself up, but that was never going to happen anyway — not while Jamie Dimon remains CEO.
What the results should really do is get the market believing in JPM stock again.
It’s been a long time since JPMorgan earnings ran the table like they did Tuesday. If the bank can string together a couple of quarters like the last one, JPM stock will resume its winning ways.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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