The outlook for the US economy “feels better” than it did three months ago, JPMorgan Chase said on Tuesday, as it announced a much smaller provision for loan losses in the third quarter after a record charge earlier in the year.
America’s biggest lender took loan loss charges of just $611m in the three months to the end of September, compared with the record $10.5bn booked in the quarter to the end of June. The bank had described that quarter as the peak, but few expected charges to fall so quickly.
“Things do feel better than we thought they would [three months ago],” chief financial officer Jenn Piepszak said of the economic outlook and likely loan losses arising out of the pandemic, though she stressed that uncertainty remained “very very high”.
Revenues from JPMorgan’s markets unit jumped 30 per cent year on year, better than the 20 per cent increase the bank’s chief financial officer projected in mid-September. Fixed-income and equity trading revenues increased 29 per cent and 32 per cent respectively.
Overall, JPMorgan posted revenues of $29.1bn compared with the $28.2bn expected by analysts and $30bn in the third quarter of 2019. Net income of $9.4bn was more than the $9.1bn recorded in the same quarter last year.
In another encouraging sign for the recovering US economy, JPMorgan said September’s credit and debit card spending showed positive year-on-year growth for the first time since pandemic-related shutdowns began in March.
Net charge-offs — which represent actual loans written off less recoveries on bad loans — came in at $1.2bn, down from $1.6bn in the second quarter. Jamie Dimon, chief executive, and other executives have previously warned that government stimulus measures, including business and employment support, mean the full impact of the Covid-19 recession is not yet being felt in banks’ loan books.