Shares in JP Morgan, the largest US bank by assets, rallied 2.5% on Thursday as the bank reported a 35%increase in first quarter net profit to $8.71 billion, beating analysts’ estimates.The rally comes at the end of a three-week upward streak leading up to the earnings release.
While impressive, the bank’s profit increase needs to be put into a little bit of perspective: the new US federal tax code introduced at the end of 2017 meant that banks like JPMorgan had to book multi-billion-dollar charges in their fourth quarter earnings which brought full year earnings down. The new tax law, however, will provide banks with long-term benefits which will be felt over the coming quarters.
Nevertheless JPMorgan’s profit growth clearly exceeded that of its peers and that of Wall Street overall where growth has been on average 17% in the first quarter. The bank’s biggest growth came from equity sales and trading which was 25% higher on the year. Fixed income, currency and commodity trading increased by 7% while banking revenue slipped 3%.
The bank’s chief executive Jamie Dimon said JPMorgan has been outpacing the industry on consumer deposit growth while attracting significant net new money and growing client investment assets by 13%.
Citigroup, Wells Fargo and two more US banks are reporting earnings Friday.
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