JPMorgan Chase reported expectation-beating third-quarter results on Wednesday, largely aided by the release of substantial loan loss reserves. 

Instead of the $3 per share analysts polled by Refinitiv had forecast, the largest bank in the United States posted earnings per share of $3.74. Its revenue came in at $640m above Wall Street estimates at $30.44bn (£22.3bn). 

A 45% year-on-year rise in investment banking revenue to $3bn accounted for much of this increase.

The boom that followed in the wake of March 2020’s stock market plunge has driven the valuations of America’s largest corporations up. This in turn has prompted them to raise debt and use stock for acquisitions. 

With the phenomenon continuing into the third quarter of 2021, investment banking fees rose by 52%, driven by higher advisory and equity underwriting fees.

Having been forced to set aside billions of dollars in loan loss provisions at the height of Covid-19 uncertainty, the bank also released $2.1bn from its credit reserves as the post-crisis recovery got underway. Its total allowance for credit losses now stands at $20.5bn.

Dimon hails latest results

Chief Executive Officer Jamie Dimon said that the release came as “economic outlook continues to improve and our scenarios have improved accordingly”. 

The longstanding CEO also stated that the bank “delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions”.

While the firm’s fixed income revenue fell by 20% to $3.67bn, this was offset by a 30% rise in equities trading revenue above the $2.1bn prediction to $2.6bn.

JPMorgan retained its position as the second-largest provider of global M&A advisory services.

The largest, Goldman Sachs, is set to report its third quarter results on Friday, with other firms such as Bank of America, Morgan Stanley, Citigroup and Wells Fargo all posting their earnings on Thursday.

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