Big banks JPMorgan and Citigroup get US earnings season off to good start

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US third-quarter earnings season kicked off with big banks JPMorgan Chase & Co (NYSE:JPM) and Citigroup Inc (NYSE:C) both beating Wall Street expectations.


JPMorgan, America’s largest bank by the size of its assets, reported US$9.4bn of net income or earnings of US$2.92 per shares on adjusted revenue of US$29.94bn.


Revenue was down slightly from US$30.0bn, but well ahead of the US$28.2bn that analysts forecast, while EPS beat the US$2.23 Street consensus, according to Factset.


READ: UK banks to face more competition as JPMorgan Chase plans 2021 launch


Net interest income was down 9% due to low global interest rates, though this was offset by higher income in the Corporate & Investment Bank (CIB) as well as balance sheet growth.


Jamie Dimon, chairman and CEO, hailed the CIB arm as “a big driver” of performance, with markets revenue up 30% and global investment banking fees up 9%.


“CIB and Commercial Banking continue to attract and retain deposits given our strong client franchise as our clients remain liquid. Asset & Wealth Management generated record revenue and net income and saw strong net inflows into long-term products.”


In consumer and community banking deposits were up 28% year on year, with recent market data showing the bank was number-one in US retail deposits for the first time.


JPM’s CET1 capital position rose to US$198bn with a CET1 ratio of 13.0% up 60 basis points after paying the dividend, while credit reserves were maintained at US$34bn.


The market leader made a US$611mln provision for credit losses, down from the huge US$10.5bn in the second quarter.


Citigroup, the third largest bank in the US, meanwhile reported net credit losses of US$1.9bn for the third quarter, down from US$2.2bn in the second.


Like its larger peer, the bank’s trading arm offset lending income to allow it to stay in the black as revenue declined 7% to US$17.3bn, a smidgen higher than the US$17.2bn expected.


The provisions for loan losses led to EPS falling 32% to US$1.40, though this was comfortably better than the US$0.93 average analyst forecast according to Refinitiv.


CEO Michael Corbat, who it was announced last month will be replaced by his deputy Jane Fraser next February, said: “We continue to navigate the effects of the COVID-19 pandemic extremely well.


“Credit costs have stabilized; deposits continued to increase; and revenues are up 3% year-to-date.”


As well as lauding the performance of the markets-focused divisions amid the higher market volatility due to the pandemic, he the consumer banking saw higher activity in mortgage and wealth management products despite revenues remaining lower as a result of the pandemic.


Sector rivals Goldman Sachs and Bank of America are scheduled to report on Wednesday, with Morgan Stanley the day after.

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