JP Morgan rises 64% as US banks stay buoyant: Strong trading revenues take Wall Street by surprise

JP MORGAN yesterday continued the run of spectacular results from US financial institutions, reporting earnings up 64 per cent at a record dollars 432m ( pounds 284m) in the first quarter thanks to record revenues from trading activities.

The unexpectedly strong trading revenues - dollars 469m in the first quarter compared with dollars 164m a year earlier - surprised Wall Street and suggested that other US banks with big trading operations may also report a buoyant quarter.

The performance exceeded Morgan's 1991 first-quarter record on trading revenues of dollars 446m. It also surpassed Citicorp's record for US banks of dollars 451m in 1992's third quarter.

Corporate finance income was up 23 per cent and investment management revenues increased 33 per cent. Commissions at the bank, America's fourth largest in terms of assets, were up by 18 per cent. Those income streams brought Morgan's non- interest revenue to a record dollars 1.05bn, breaking the dollars 1bn mark for the first time.

Dennis Weatherstone, chairman, attributed the increase in revenues partly to market-making in swaps and other derivatives, and to fixed-income trading, especially in Europe.

Morgan's earnings of dollars 432m, or dollars 2.16 a share, came before accounting changes and compared with dollars 264m or dollars 1.32 a share in the 1992 quarter. The earnings were well above analysts' forecasts and gave the bank's shares a lift in early New York trading.

After accounting changes for income taxes and retirement benefits, however, earnings actually dropped to dollars 295m, or dollars 1.47 per share, from dollars 716m, or dollars 3.62 per share.

Operating expenses jumped to dollars 809m from dollars 620m, reflecting incentives payments to staff in line with increased earnings.

Several large brokerage groups, including Merrill Lynch, have already announced very strong quarterly figures.

Mark Gross, senior vice president in New York with IBCA, the credit rating agency, said: 'The US economy hasn't come back yet, but the environment has been good for US commercial banks in the first quarter.'