JPMorgan Chase posted a 52% jump in its first-quarter profits, helped by higher rates of interest, which allowed the bank to charge customers more for loans. The bank saw deposits grow noticeably, as business and customers flocked to the banking titan after the failure of Silicon Valley Bank and Signature Bank last month.
JPMorgan shares rose greater than 7% to $138.69.
With JPMorgan’s strong results, in addition to solid results from Citigroup and Wells Fargo on Friday, there appear to be few signs of potential trouble within the banking system — a minimum of among the many nation’s biggest, most complex financial institutions.
“These were probably the most watched bank earnings announcements in over a decade, with market participants scouring the outcomes on the lookout for signs of cracks within the US banking sector. Those analysts on the lookout for signs of the banking crisis were greatly relieved to not find any,” said Octavio Marenzi, CEO of the consulting firm Opimas LLC, in an email.
JPMorgan, the nation’s biggest bank by assets posted a profit of $12.62 billion, in comparison with a profit of $8.28 billion in the identical period a 12 months earlier. On a per-share basis, the bank earned $4.10 a share, up from $2.63 a share a 12 months ago, beating analysts’ expectations.
Many of the profit growth got here from higher rates of interest. The bank’s net interest income was $20.8 billion within the quarter, up 49% from last 12 months.
JPMorgan, the nation’s biggest bank by assets posted a profit of $12.62 billion, in comparison with a profit of $8.28 billion in the identical period a 12 months earlier.AFP via Getty Images
JPMorgan grew deposits by $37 billion in the course of the quarter, as much as $2.4 trillion. Deposits at big banks had been falling for several quarters as consumers spent down their pandemic savings and businesses tapped into their stored money to pay bills. But with the collapse of Silicon Valley Bank and Signature Bank in March, businesses have been withdrawing their funds from smaller banks and moving them into the larger banks, that are considered “too big to fail” and have an implicit government backstop.
In a call with reporters, JPMorgan Chief Financial Officer Jeremy Barnum said a lot of the latest deposits flowed into latest business and company bank accounts opened previously month. The brand new deposits reversed the flow of deposits exiting the bank for several quarters.
“What crisis?,” analysts at UBS titled their report after JPMorgan, Wells and PNC reported their results.
The bank grew deposits by $37 billion in the course of the quarter, as much as $2.4 trillion. Above, CEO Jamie DImon.Bloomberg via Getty Images
JPMorgan and CEO Jamie Dimon have been the industry’s go-to problem solvers for banking issues for years now. After the failure of Silicon Valley Bank and Signature Bank, JPMorgan helped put together a consortium of other big banks to maintain First Republic Bank from being next to fail. The group of banks put $30 billion in uninsured deposits into First Republic, which appears to have a minimum of bought the midsize bank a while to repair its balance sheet and possibly discover a buyer.
“The US economy continues to be on generally healthy footings — consumers are still spending and have strong balance sheets, and businesses are in good condition. Nonetheless, the storm clouds that now we have been monitoring for the past 12 months remain on the horizon, and the banking industry turmoil adds to those risks,” Dimon said in a press release.
JPMorgan continued to profit from consumers switching from saving to spending. Bank card spending rose 13% from a 12 months earlier, and more customers are actually keeping a balance as a substitute of paying off their bank cards, so the bank is earning profits from processing the transactions in addition to the interest off the balances.
Meanwhile business within the bank’s corporate and investment bank stays relatively quiet, as many businesses and investors are holding off making big decisions amid high inflation. Revenue from advisory fees were flat, while revenue from trading stocks and bonds were flat to down.