JPMorgan edges closer to leaving pandemic behind, its earnings show

By Anirban Sen and Elizabeth Dilts Marshall

(Reuters) -JPMorgan Chase & Co beat analysts’ profit estimates on Wednesday, thanks to record revenue in some investment banking businesses and a sunnier economic outlook that allowed the largest U.S. bank to release money it had set aside for potential loan losses during the coronavirus pandemic.

JPMorgan’s third-quarter profit was 24% higher than the same period last year due to those factors, but analysts were most enthusiastic about signs that customers are getting back to spending and investing. The bank’s average loans and deposits rose, as did credit-card spending, helping JPMorgan’s lending income rise 2.5% from the second quarter.

Executives were cautiously optimistic that the economy is finally on a healthy path after 19 months of pandemic-related illness, business closures, travel restrictions and stay-at-home tendencies. They predicted loan demand may not substantially change until next year, the earliest, but were encouraged by early signs that the world is getting back on track.

“We don’t know the future any better than you do,” JPMorgan (NYSE:) CEO Jamie Dimon said on a call with journalists. “What we really want is good growth right now. These are great numbers. By the end of 2022 people are forecasting 4% unemployment, wages are going up, jobs are plentiful. Getting out of COVID, we should all be thanking our lucky stars.”

Investors often see JPMorgan not just as a big American bank, but as a symbol of how well the global economy and markets are doing. It has a substantial presence in almost all conventional lending businesses – from mortgages to commercial loans – one of the largest investment banks on Wall Street and insights into multinational corporations through its capital markets and treasury services operations.

The highlight for JPMorgan’s third quarter was its Corporate & Investment Bank division, where advisory fees almost tripled due to strong performance in M&A and equity underwriting, fueled partly by a spate of initial public offerings.

During the quarter, JPMorgan maintained its position as the second-biggest provider of worldwide M&A advisory after Goldman Sachs Group Inc (NYSE:), based on fees, according to Refinitiv.

JPMorgan’s decision to release $2.1 billion from credit reserves also bolstered its profit. Dimon and many analysts and investors tend to remove reserve fluctuations from “core” their earnings analyses, because they are based on accounting standards and do not reflect new money coming in the door.

Overall, JPMorgan’s profit rose to $11.7 billion, or $3.74 per share, in the quarter ended Sept. 30, compared with $9.4 billion, or $2.92 per share, a year earlier. Excluding the reserve release and an income tax benefit, its profit would be $9.6 billion, or $3.03 per share.

…