JPMorgan Profit Beats Estimates on Surge in Bond-Trading

Revenue
JPMorgan Earnings Beat Estimates on Bond-Trading Revenue - Bloomberg
JPMorgan Chase & Co. posted profit that beat analysts' estimates on a 48 percent surge in fixedincome revenue, fueled by trading of government bonds after the U.K. voted to leave the European
Union.
Third-quarter net income declined to $6.29 billion, or $1.58 a share, from $6.8 billion, or $1.68, a
year earlier, when results got a boost from $2.2 billion in tax benefits, New York-based JPMorgan
said Friday in a statement. Earnings excluding legal and accounting adjustments were $1.59 a share,
topping the $1.39 average estimate.

JPMorgan, the biggest U.S. bank, kicks off earnings season for the industry, offering insight into how
Wall Street's trading and advisory operations performed during the typically slow summer months.
Beset by slow growth and low interest rates for years, banks suffered a weak start to 2016 as falling
energy prices triggered an equity rout. Bond trading recovered in the second quarter, driven by
interest-rate and currency desks, a trend that analysts expected to continue into the period ended
Sept. 30.
Revenue rose to $25.5 billion, beating the $24.2 billion average estimate of 10 analysts surveyed by
Bloomberg, while expenses fell 5.9 percent to $14.5 billion, compared with the $14.1 billion
estimate. Fixed-income trading revenue jumped to $4.33 billion, more than $1 billion higher than the
average estimate of seven analysts surveyed by Bloomberg. Equities-trading revenue advanced less
than 1 percent to $1.41 billion, compared with analysts' $1.35 billion estimate.
Trading tied to government bonds and other assets linked to interest rates "was particularly strong
with good client activity, as markets remained active throughout the quarter post the Brexit vote and
in anticipation of central bank actions" and changes in money-market regulation, the firm said in the
statement. Credit and securitized-products desks gained on "improving market sentiment" and
robust issuance, the bank said.
JPMorgan climbed 1.4 percent to $68.66 at 9:46 a.m. in New York. The stock had gained 2.6 percent
this year through Thursday, outpacing the 24-company KBW Bank Index, which fell 3 percent.

Investment Bank
Earnings at the corporate and investment bank, run by Daniel Pinto, doubled to $2.91 billion as
revenue rose 16 percent from a year earlier to a $9.46 billion, exceeding the $8.2 billion estimate of
David Konrad, an analyst at Macquarie Securities USA Inc. Expenses declined 20 percent.
Compensation consumed 27 percent of the unit's revenue, compared with 30 percent a year earlier.
Profit from consumer and community banking, run by Gordon Smith, fell 16 percent to $2.2 billion.
Revenue was $11.3 billion, up 4 percent from a year earlier. Provisions for credit losses rose to
$1.29 billion from $389 million a year earlier and $1.2 billion in the second quarter.
Net income in asset management, run by Mary Callahan Erdoes, increased 17 percent to $557
million. Commercial banking, the unit run by Doug Petno, posted a 50 percent profit increase to
$778 million.
Wells Fargo & Co. and Citigroup Inc., the third- and fourth-biggest U.S. banks by assets, released
results Friday as well. Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley report
next week.
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