September-period reported earnings for JPMorgan Chase & Co. (NYSE: JPM – $95.99) of $1.76 a share exceeded both the $1.58 logged in the comparable quarter of 2016 and the consensus estimate of $1.65. Total revenues of $25.33 billion were up 3% from the same period a year ago and topped the Street projection of $24.91 billion. Meanwhile, expenses in the quarter were mostly flat. By business segment . . .
. . . JPMorgan’s Consumer & Community Banking segment drove most of the earnings advance. Although mortgage revenues fell 17%, increases in net interest income, credit card and loan and deposit fees more than offset the shortfall. The company’s Corporate & Investment Banking division was its weak link. Segment profits declined 13%. Fixed-income markets revenues fell 27% compared to a very strong year-earlier performance, reflecting lower market volatility and tighter credit spreads. There were some bright spots, however, including strong advisory, treasury and lending revenues. The nation’s largest bank’s other two business groups, Commercial Banking and Asset & Wealth Management, posted profit increases of 13% and 21%, respectively. Commercial banking continues to benefit from investments in recent years in bankers, support staff and technology. Asset management revenues were driven by strong equity market levels and wider deposit spreads.
Looking ahead, I expect the earnings outlook to remain mostly positive. Loan growth, which has exceeded industry rates recently, might moderate but, like most banks, Chase’s net interest income should benefit as interest rates rise. And while origination costs related to its popular Sapphire credit card may slip further, asset management and commercial banking profits ought to continue to grow nicely. Mortgage revenues may remain soft and the outlook for fixed-income markets revenues are uncertain since they are influenced by market volatility. The fourth quarter is looking like a $1.68 per share figure and the full year at $6.83. Next year Street views average $7.57/share. The shares, yielding 2.3%, can continue to be held for long-term total returns.