JPMorgan Chase’s earnings rose fivefold in the first quarter, as a strong U.S. economy allowed it to release more reserves for potential bad loans and raised banking fees for investments.
However, Jimmy Damon, chief executive, warned on Wednesday that the stimulus from the reserve release would not last and that the demand for loans would continue to challenge even after consumer spending returns to pre-epidemic levels.
Shares of the bank fell 1 percent to 2 152.57 during pre-market trading.
The largest U.S. bank loan loss by reserves stood at 5. 5.2 billion, indicating the belief that government stimulus and rapid vaccine rollouts once frightened economists.
Rising unemployment in the first days of the epidemic and a slowdown in economic activity in the first half of last year prompted banks to keep .7 15.7 billion for potential bad loans. Although the lion’s share of these losses were never realized, Jepimorgan was allowed to reverse more than half of these reserves to date.
“With all the costs of the epidemic, potential infrastructural costs, continued quantitative easing, strong consumer and business balance sheets and around the potential edge of the epidemic, we believe the economy has the potential for extremely strong, multi-year growth,” Dimon said.
The company’s final earnings rose 14 percent to. 33.1 billion due to increased banking fees and energy in the capital market. However, the rock-down interest rate and the lack of demand for loans continue to plague the core business of the bank.
Net interest income fell 11 percent to ১৩ 13 billion and a net interest margin – a close look at how much difference a bank charges for deposits and payments – was contracted from 1.739 percent a year ago to 1.699 percent.
Wells Fargo, which does not have a large capital market or investment banking business compared to its big bank counterpart, reported that its net interest income fell 22 percent during the quarter. Overall revenue rose 2 percent in the quarter due to higher mortgage fee increases, helping to keep Wall Street expectations high.
Total loans at JPMorgan rose one percent from a year earlier, while deposits, which have been padded by monetary stimulus and the Federal Reserve’s simple monetary policy, rose 36 percent.
Wells Fargo’s loan book has shrunk 9 percent and deposits have risen 4 percent. The bank’s deposit growth has lagged behind peers compared to last year due to restrictions by regulators. Increase the balance sheet.
Overall, JPMorgan reported net income of $ 14.3 billion, or ৪ 4.50 per share, compared to ৯ 2.9 billion or c6 cents last year. Excluding the effect of one-time items such as reserve release, the bank has earned আয় 3.31 per share.
Analysts had forecast earnings of $ 3.10 per share at 30 30 billion, according to Factset.
Wells Fargo reported net earnings of 4. 4.7 billion, or 1. 1.05 per share, compared to $ 653 million or 1 percent last year. On a consolidated basis, earnings per share was 75 cents compared to the 71 cents fact set estimate.
*The story has been revised after it was initially revealed that the banking fee for the total story has increased by 57 per cent