JPMorgan smashes profit estimates on M&A boom, wealth management
strength
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[October 13, 2021] By
Anirban Sen and Elizabeth Dilts Marshall
(Reuters) -JPMorgan Chase & Co reported a
bigger-than-expected 24% jump in third-quarter profit on Wednesday,
boosted by a global dealmaking boom and strength in its wealth
management arm.
The bank, whose fortunes reflect the health of the U.S. economy, said
robust M&A activity offset a slowdown in trading. Its consumer bank also
reported a strong quarter as credit card spending ticked up and
customers paid off loans at a slower pace, meaning the bank earned more
interest income.
JPMorgan also released $2.1 billion from its credit reserves during the
quarter.
Banks were forced to set aside billions last year for possible loan
defaults during the pandemic. But a consumer-friendly monetary policy
and stimulus checks buoyed spending for the average American consumer
and increased their savings, allowing banks to release some of their
reserve capital.
JPMorgan's net income 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.
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Analysts on average had expected earnings of $3.00 per share, according
to Refinitiv.
Wall Street banking has remained strong for most of the past year, as
large, cash-flush financial sponsors and corporates embarked on a
dealmaking spree, helping drive up investment banking fees at the
largest Wall Street banks to record levels.
Total reported revenue rose 1% to $29.65 billion in the quarter.
Net revenues in the bank's asset and wealth management division were up
21%, boosted by higher management fees in the division that manages
wealth for large institutions and individual investors.
Investment banking revenue surged 45% to $3 billion.
Other large U.S. banks including Bank of America, Citigroup, Wells Fargo
and Morgan Stanley will report results on Thursday, while Goldman Sachs,
Wall Street's premier investment bank, will round out the earnings
season on Friday.
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![](../images/101321pics/2021-10-13T111146Z_3_LYNXMPEH9C0G2_RTROPTP_4_JP-MORGAN-SPOOFING-LAWSUIT_small.JPG)
A view of the exterior
of the JPMorgan Chase & Co corporate headquarters in New York City
May 20, 2015. REUTERS/Mike Segar
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DEALMAKING FRENZY
With global investment banking fees hitting an all-time record in the first half
of the year, banks like JPMorgan have made the most of the dealmaking boom.
The biggest U.S. corporations have benefited from booming stock markets that
have driven up their valuations and allowed them to use stock as acquisition
currency, while they have also sought to raise debt and used large investment
banks for advice on deals.
During the quarter, JPMorgan maintained its position as the banking world's
second-biggest provider of worldwide M&A advisory after Goldman Sachs, according
to Refinitiv. The league tables rank financial services firms by the amount of
M&A fees they generate.
High levels of fundraising, debt refinancings, convertible bond deals and stock
sales also boosted investment banking.
JPMorgan's trading outfit, however, continued to see a slowdown in activity and
did not hit the highs of the previous quarters that were boosted by
unprecedented volatility in financial markets and a "meme stock"-fueled trading
frenzy.
Overall, markets and securities services revenue fell 4% to $7.5 billion, with
fixed income trading slumping 20% to $3.7 billion. However, equity markets
revenue jumped 30%.
(Reporting by Anirban Sen in Bengaluru and Elizabeth Dilts in New York;
Additional reporting by Noor Zainab Rizhvi; Editing by Saumyadeb Chakrabarty)
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