JP Morgan Chase, America’s largest bank by assets, surpassed expectations with its quarterly profits today, booking a 33 per cent rise as chief executive Jamie Dimon spoke of “positive signs” that the world’s largest economy is “healthy and getting stronger.”
iThe bank, which has faced intense scrutiny and criticism for the so-called “London Whale” trading debacle last year that left it nursing a massive $6bn-plus loss, said net income for the first three months of 2013 had climbed to a record $6.5bn, against $4.9bn in the corresponding period last year. While that was well ahead of expectations, JP Morgan’s revenues were slightly short of market hopes, coming in at $25.8bn. Analysts had expected around $600m more in revenues, which would have brought the figure closer to the $26.8bn result seen last year.
Soon after the release of the results, the bank’s shares retreated in pre-market trading as Wall Street digested the figures.
Underpinning the strong profits were a program of cost-cutting, gains in the investment banking business and growth in mortgage-related revenues, which have been helped by the loose monetary policy backdrop in the US. Interest rates remain at record-low levels, and the Federal Reserve has thus far stood by its program of buying up tens of billions of dollars worth of mortgage-related bonds every month.
The bank, which is reportedly lobbying shareholders to vote against a non-binding proposal at its annual meeting next month that calls for Mr Dimon to be stripped of his dual role as chairman, also rewarded investors with plans to raise its second quarter dividend to $0.38 per share, up from the current $0.30 per share. The hike came as it bought back $2.6bn in common equity over the first quarter. The board has authorised the buyback of a further $6bn between the current quarter and the end of March next year.
“We are seeing positive signs that the economy is healthy and getting stronger. Housing prices continued to improve and new home purchases are also starting to come back,” Mr Dimon said. “We also saw strong performance in our credit card portfolio, with net charge-offs remaining near historic lows, another sign that consumers are healthier and more confident.”