Release of loan loss reserves and M&A boom lifts JPMorgan profits

A release of over $2bn in reserves set aside to deal with an expected wave of loan defaults thrusted JPMorgan deep into profitability. 

The Wall Street giant’s net income for the third quarter climbed to $11.7bn, up $2.2bn from $9.4bn in the same period last year.

The investment bank released a wave of reserves after the economic rebound from the depths of the Covid-19 crisis averted a flurry of loan defaults.

A booming M&A environment, supported by high demand among firms to go public, drove fees in JPMorgan’s corporate and investment bank up 52 per cent.

Strong dealmaking conditions lifted the bank’s total revenues to $30.4bn, up from $29.9bn in the same period last year.

Jamie Dimon, chairman and chief executive of JPMorgan, said the bank had “delivered strong results as the economy continues to show good growth – despite the dampening effect of the Delta variant and supply chain disruptions.”

Earnings per share, a key measure of the company’s profitability, hit $3.74, above analysts’ expectations of $3.00. 

Dimon stressed the release of loan loss reserves are not measured as recurring profits. Excluding them, profits were around £9.6bn.

JPMorgan is expanding its consumer and credit division into international markets in a bid to boost diversify its business. 

It recently launched a digital-only bank in the UK, called Chase, intended to steal market share from rivals Monzo and Revolut.

“We are making important investments, including strategic, add-on acquisitions that will drive our firm’s future prospects and position it to grow and prosper for decades,” Dimon added.

Its consumer and credit arm registered a 26 per cent increase in debit and credit card transactions, while deposits swelled 20 per cent.