JPMorgan's (JPM) Q3 Earnings Beat On Loans & Higher Rates

Higher-than-expected equity trading revenues and rise in demand for loans drove JPMorgan’s (JPM - Free Report) third-quarter 2018 earnings of $2.34 per share, which outpaced the Zacks Consensus Estimate of $2.24. The figure was up 33% from the prior-year quarter.

The stock rose nearly 1.5% in pre-market trading, indicating that investors have taken the results in their stride. Notably, the full-day trading session will depict a better picture.

As expected, Markets revenues recorded a fall. A 17% rise in equity trading income was more than offset by 10% decline in fixed income trading revenues. Further, home lending business revenues fell 16% year over year, mainly due to lower net servicing revenues and production margin compression.

Further, operating expenses increased in the reported quarter.

Notably, investment banking fees were relatively stable, with 40% jump in equity underwriting fees offset by decline in advisory fees and debt underwriting fees.

Decent loan growth (driven largely by improved wholesale and credit card loans) and rise in interest rates aided net interest income growth. The reported quarter also recorded a decline in provision for credit losses. Further, lower tax rate supported profitability during the quarter.

Among other positives, credit card sales volume was up 12% and merchant processing volume grew 14%. Further, Commercial Banking average core balances jumped 4% and Asset Management average loan balances rose 12%.

The overall performance of JPMorgan’s business segments, in terms of net income generation, was decent. All segments, except Corporate, reported a rise in net income on a year-over-year basis.

Net income was up 24% from the prior-year quarter to $8.4 billion.

Equity Trading Income, Higher Rates & Loan Growth Aid Revenues

Net revenues as reported were $27.3 billion, up 5% from the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $27.2 billion. Rising rates, loan growth and increase in Markets non-interest revenues were the main reasons for the improvement. The positives were partially offset by a decline in mortgage banking income.

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