JPMorgan’s “London Whale” Doesn’t Weigh on Profits
JPMorgan Chase (NYSE:JPM) announced early on October 12 that it pulled in revenue of $25.9 billion in the latest quarter. This is up 34 percent from a year ago, yielding a third-quarter net income of $5.71 billion, or $1.40 per share. Analysts were expecting $1.24 per share on average, according to Reuters.
Mortgage lending revenue rose 36 percent to $1.8 billion in the wake of QE3, indicating that the $40 billion per month bid may actually be clearing a path for the market. Total foreclosures fell to a five year low in September, according to a RealtyTrac report.
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“We believe the housing market has turned the corner,” said JPMorgan CEO Jamie Dimon in a statement.
Federal investigators have been looking into JPMorgan’s “London Whale Trade” disaster and have been poking at the idea of pressing criminal charges. The bank has largely rebounded from the loss of over $5 billion earlier in the year. The company reported only modest losses in the associated portfolio this quarter.
“The banks are a huge part of what’s going on – they have been trading below tangible book value, which means people don’t believe what is on their books, so any time we get information on them, that could be a driver for the market,” said senior equity analyst at Fort Pitt Capital Group Kim Forrest to Reuters.
Wells Fargo (NYSE:WFC) echoed JPMorgan with record earnings, but fell below revenue expectations. The bank pulled in $4.9 billion in the third quarter, $0.88 per share, up 22 percent from a year ago. Revenue was expected at $21.56 billion, according to analysts polled by Thomson Reuters. Wells Fargo reported $21.2 billion, up from $19.6 billion compared to a year ago.
Both banks have faced litigation related the the housing crisis. JPMorgan was recently targeted by New York Attorney General Eric Schneiderman because of mortgage-backed securities sold by Bear Stearns, a bank that Dimon bought in 2008 to try and curb damage associated with the crisis. Bank of America (NYSE:BAC), also wrapped up in potential MBS scandal, will report third-quarter earnings on October 17.
Investing Insights: JPMorgan Chase & Co. Earnings: Beats Analysts’ Estimates.