The shares of JP Morgan Chase took off Friday on Wall Street, ending up 4.69% to $111.21, as the largest US bank by assets has unveiled quarterly results that exceeded expectations. The institution, which benefited from higher interest rates and good performance from its advisory and debt securities business, recorded a net profit of $18 billion or $2.65 per share over the first three months of the year, versus $2.35 consensus. Net revenues reached $29.8 billion, up 5%, while provisions for credit losses stood at $1.5 billion, up $330 million year-on-year. Trading revenues dropped 17% to $5.5 billion, but the market expected a drop of 18%.
The bank reiterated its forecast of $58 billion in interest income for the current fiscal year, $3 billion more in 2018.
The margin, a key figure for measuring the profitability of loans granted by the bank, increased slightly in the first quarter (+0.02 percentage point to 2.56%), but at a slower pace than on the previous two quarters.
Second largest US bank to publish its quarterly on Friday, Wells Fargo has, like JP Morgan, exceeded the expectations of analysts. During the first three months of the year, the California bank posted a net profit of $5.9 billion or $1.20 against a consensus of $1.09.
Net interest income amounted to $12.3 billion. Provisions for credit losses were $845 million compared to $744 million expected. The ROE reached 12.71% against 10.58% a year earlier. Finally, the common equity Tier 1 ratio stands at 11.9%, compared with 11.6% consensus.
The stock first welcomed these figures by a rise of 1.5% in pre-session on Wall Street. But the trend then reversed, and the stock dropped 2.6% to close at $46.49.
The markets were disappointed by Wells Fargo CFO John Shrewsbury’s announcement that the group’s net interest margin (NIM) is expected to decline for the full year of 2019, citing declining interest rate expectations and increased competition in the credit and deposit market.