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JPMorgan smashes profit estimates on M&A growth, wealth management strength

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Oct 13 (Reuters) – JPMorgan Chase & Co (JPM.N) reported a bigger-than-expected 24% leap in third-quarter profit on Wednesday, boosted by a world dealmaking growth and strength in its wealth management arm.

The financial institution, whose fortunes replicate the well being of the U.S. financial system, mentioned strong M&A exercise offset a slowdown in buying and selling. Its client financial institution additionally reported a robust quarter as bank card spending ticked up and prospects paid off loans at a slower tempo, which means the financial institution earned extra curiosity revenue.

JPMorgan additionally launched $2.1 billion from its credit score reserves through the quarter.

Banks had been compelled to put aside billions final yr for potential mortgage defaults through the pandemic. But a consumer-friendly financial coverage and stimulus checks buoyed spending for the common American client and elevated their financial savings, permitting banks to launch a few of their reserve capital.

JPMorgan’s web revenue rose to $11.7 billion, or $3.74 per share, within the quarter ended Sept. 30, in contrast with $9.4 billion, or $2.92 per share, a yr earlier.

Analysts on common had anticipated earnings of $3.00 per share, in keeping with Refinitiv.

Wall Street banking has remained robust for many of the previous yr, as giant, cash-flush monetary sponsors and corporates embarked on a dealmaking spree, serving to drive up funding banking charges on the largest Wall Street banks to file ranges.

Total reported income rose 1% to $29.65 billion within the quarter.

Net revenues within the financial institution’s asset and wealth management division had been up 21%, boosted by larger management charges within the division that manages wealth for big establishments and particular person buyers.

Investment banking income surged 45% to $3 billion.

Other giant U.S. banks together with Bank of America (BAC.N), Citigroup (C.N), Wells Fargo (WFC.N) and Morgan Stanley (MS.N) will report outcomes on Thursday, whereas Goldman Sachs (GS.N), Wall Street’s premier funding financial institution, will spherical out the earnings season on Friday.

DEALMAKING FRENZY

With world funding banking charges hitting an all-time file within the first half of the yr, banks like JPMorgan have made the many of the dealmaking growth.

The largest U.S. firms have benefited from booming inventory markets which have pushed up their valuations and allowed them to make use of inventory as acquisition foreign money, whereas they’ve additionally sought to lift debt and used giant funding banks for recommendation on offers.

During the quarter, JPMorgan maintained its place because the banking world’s second-biggest supplier of worldwide M&A advisory after Goldman Sachs, in keeping with Refinitiv. The league tables rank monetary providers companies by the quantity of M&A charges they generate.

High ranges of fundraising, debt refinancings, convertible bond offers and inventory gross sales additionally boosted funding banking.

JPMorgan’s buying and selling outfit, nonetheless, continued to see a slowdown in exercise and didn’t hit the highs of the earlier quarters that had been boosted by unprecedented volatility in monetary markets and a “meme stock”-fueled buying and selling frenzy.

Overall, markets and securities providers income fell 4% to $7.5 billion, with fastened revenue buying and selling slumping 20% to $3.7 billion. However, fairness markets income jumped 30%.

Reporting by Anirban Sen in Bengaluru and Elizabeth Dilts in New York; Additional reporting by Noor Zainab Rizhvi; Editing by Saumyadeb Chakrabarty

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