JPMorgan Chase & Co. and Wells Fargo & Co. released third quarter earnings today—the first major U.S. banks to post quarterly figures this month. As analysts expected, both companies posted strong growth compared to weak numbers a year ago.
JPMorgan’s earnings blew past analyst’s predictions, posting $5.71 billion in net income, $1.40 per share, a 34-percent increase from one year ago when it earned $4.26 billion, or $1.02 a share. In spite of a loss on accounting adjustments and $825 million in mortgage charge-offs, the bank’s quarterly earnings significantly exceeded the $1.20 per share analysts surveyed by Bloomberg had speculated.
Chief Executive Officer Jamie Dimon attributed the successful quarter to low interest rates and government programs that assisted consumers in financing and refinancing home loans. In fact, increased mortgage fees of $993 million balanced the $831 million decrease in net mortgage income.
“The housing market has turned the corner,” Dimon said in a statement. “We were encouraged that credit trends continued to modestly improve, and, as a result, the firm reduced the related loan-loss reserves by $900 million.”
The bank’s losses related to the “London Whale” trading fiasco in the first half of the year, which lost the company about $5.8 billion, continued only slightly into the third quarter—a sign the company is leaving the scandal behind.
Dimon also reported total bank employees decreased by 1 percent over the past quarter, a loss of about 3,300 jobs. JPMorgan Chase current employs about 259,550 employees. Total employees may continue to drop as the bank looks for ways to do business more efficiently, Dimon added.
Dimon declined to discuss details of end-of-year bonuses or his own salary., which was $23 million last year, including for the most part awards of company shares.
“The company’s doing quite well, and we want to pay our people fairly and properly as we always have,” he said. . “I would never tell you what our board of directors does, OK”.
Wells Fargo, while posting a profit for the third quarter, did not exceed expectations in the manner achieved by JPMorgan. Although the bank posted a 22-percent increase in net income, rising to $4.94 billion, or 88 cents a share, from $4.06 billion, 72 cents, this time last year, it exceeded most analyst’s expectations by only a penny. The bank’s total revenue for the third quarter increased 8 percent to $21.21 billion, but fell shy of Wall Street analyst’s average estimate of $21.47 billion.
Fifty-three percent higher than last year, Wells Fargo’s mortgage revenue accounted for the majority of its revenue growth. It was, however, offset by a 27-percent loss in the area of card fees.
“Underlying credit quality continued to show improvement in the third quarter, as the overall financial condition of businesses and consumers strengthened, the housing market in many areas of the nation improved, and we continued to work to reduce problem assets and make new, high quality loans,” Chief Risk Officer Mike Loughlin noted.
