JPmorgan Profit Rises As Fixed-Income Trading Rebounds
JPMorgan Chase & Co, the biggest U.S. bank by assets, reported a better-than-expected rise in quarterly profit on Tuesday as revenue from fixed-income trading rebounded.
Trading picked up early in the quarter after the Swiss National Bank shocked currency markets by scrapping a three-year-old cap on the Swiss franc without warning, causing the currency to soar against the euro.
Revenue from trading fixed income, currencies and commodities (FICC) rose 5 percent to $4.07 billion, adjusted for the sale of businesses last year, including a physical commodities operation.
The bank's shares rose about 1 percent to $62.70 in premarket trading.
JPMorgan's investment bank, which includes FICC trading, is the biggest in the world by revenue according to research firm Coalition.
But the unit has been under pressure to cut costs because customers have reduced their trading since the financial crisis and regulators have demanded that big banks take fewer risks, hold more capital and improve controls.
JPMorgan is the first of the large U.S. banks to report quarterly results. Overall, results are expected to show that trading profit, debt underwriting fees, and mortgage refinancing volumes were strong, even as low interest rates cut into the profitability of loans.
The bank's net income rose to $5.91 billion, or $1.45 per share, in the first quarter ended March 31, from $5.27 billion, or $1.28 per share, a year earlier.
The results for the latest quarter included an after-tax charge of $487 million for legal expenses.
Analysts on average had expected earnings of $1.40 per share, according to Thomson Reuters I/B/E/S.
Non-interest expenses in the bank's investment banking division rose to $5.66 billion from $5.60 billion.
JPMorgan has said it wants to cut annual expenses in its investment bank by $2.8 billion by 2017, excluding legal costs, though some of the savings are expected to be offset by more spending to improve risk controls.
Company-wide expenses, adjusted for legal costs, fell by $402 million to $14.2 billion.
Provision for credit losses rose 12.8 percent to $959 million.
The bank's net interest margin fell to 2.07 percent from 2.20 percent as banks continue to increase profits in a low rate environment.
JPMorgan's return on tangible common equity was 14 percent in the quarter, compared with 13 percent a year earlier and the company's longer-term target of 15 percent.