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Morgan Stars to Open Earnings Season
JPMorgan Chase (NYSE:JPM) posted earnings that beat analysts' estimates for the top and bottom line.
The bank posted third-quarter profit of $9.44 billion, or $2.92 per share, exceeding the $2.23 consensus estimate of analysts. The firm generated revenue of $29.94 billion, about $1.5 billion more than what analysts had expected, fueled in part by better-than-expected trading results.
The key question for the quarter: Whether American banks would show that they're largely done setting aside money for loan defaults tied to the pandemic. That appears to be the case at JPMorgan, the biggest U.S. bank by assets, which had a $611-million provision in credit costs in the period, compared to $10.5 billion in the previous quarter.
Rather than building loan-loss reserves, as it had done aggressively in the first half of the year, JPMorgan actually reduced them by $569 million in the quarter, citing a runoff in its mortgage portfolio. The bank had added more than $15 billion to loan loss reserves in the first two quarters of 2020.
JPMorgan CEO Jamie Dimon noted that the total size of the bank's reserves for loan losses still rounded to $34 billion, roughly the same as the previous quarter. In the earnings release, he cited the need to maintain reserves "given significant economic uncertainty and a broad range of potential outcomes" tied to the coronavirus pandemic.
JPM shares slumped $1.05, or 1%, in Tuesday's first hour to $101.40.