Amid an expected weakness in investment banking, strong trading results, higher rates and lower tax rate drove JPMorgan’s (JPM – Free Report) first-quarter 2018 earnings of $2.37 per share, which handily outpaced the Zacks Consensus Estimate of $2.28. The reported figure was up 44% from the prior-year quarter.
Results in the reported quarter included 11 cents per share of mark-to-market gains related to the adoption of new recognition and measurement accounting guidance for certain equity investments previously held at cost.
Shares of JPMorgan rose nearly 1.4% in the pre-market trading, indicating that investors have taken the results in their stride. Notably, the full-day trading session will depict a better picture.
Decent loan growth (driven mainly by improved wholesale loans) and higher interest rates aided net interest income growth. Further, higher equity trading income (up 26%) and fixed income trading (up 8%) supported the top line. Additionally, mortgage banking income witnessed a rise, driven by growth in residential mortgage loans, partially offset by fall in mortgage origination volume.
Apart from these, the reported quarter recorded a decrease in provision for credit losses, mainly attributable to reserve release in Wholesale portfolio.
As expected, investment banking performance slumped during the quarter. While advisory fees witnessed a modest rise, both equity and debt underwriting fees declined. Further, higher operating expenses was an undermining factor.
The overall performance of JPMorgan’s business segments, in terms of net income generation, was decent. All segments, except Corporate, reported a rise in net income on a year-over-year basis.
Among other positives, credit card sales volume was up 12% and merchant processing volume grew 15%. Further, Commercial Banking average core loan balances grew 6% and Asset Management average core loan balances rose 12%.
Net income was up 35% year over year to $8.7 billion.