Here are 5 takeaways from JPMorgan Chase & Co.'s third-quarter earnings, according to the Wall Street Journal.
1. JPMorgan beat analyst expectations for profit
Third-quarter profit rose 4 percent from a year ago, beating estimates from Wall Street analysts. The bank was able to return to pre-pandemic profit levels. This came as a surprise given the current economic environment.
The bank said third-quarter profit rose 4% from a year ago, beating Wall Street estimates. JPMorgan’s return to pre-pandemic profit levels was something of a surprise. The financial health of the nation’s largest bank tends to rise and fall with the U.S. economy, which is in the grips of a painful recession thanks to the coronavirus pandemic.
2. JPMorgan's corporate and investment bank profit surged
JPMorgan's earnings were buoyed by its corporate and investment bank, where profits rose 52 percent. Companies have been forced to raise additional cash, refinance, and sell stock to combat the recession. The bank's massive consumer division posted a 9 percent decline, but it wasn't enough to stop the gains from the corporate and investment bank.
3. The bank decreased the amount of money reserved for loan defaults
JPMorgan decreased the reserves for loan defaults to $611 million in the third quarter from $10.47 billion in the second. This indicates that the bank believes the economy is recovering faster than expected and that it is well-positioned.
4. Jamie Dimon credited the US government for keeping the economy afloat
Dimon cited the $2 trillion stimulus bill that expanded unemployment benefits and provided funding for small businesses and other hard-hit industries in the midst of the pandemic. Dimon did say that he believes Congress should pass an additional stimulus package, stating that a “good, well-designed stimulus package will simply increase the chance we get better outcomes, but there is so much uncertainty we’re not saying that that is definitive.”
5. The bank has more than enough money to cover loan losses
JPMorgan currently has around $34 billion set aside to cover loan losses. However, if the economic recovery stalls and dips back into a recessionary phase the bank would need an additional $20 billion in reserves.