JPMorgan Chase’s dealmakers just helped usher in the firm’s best first quarter on record, but shares fell in early trading Wednesday as the bank warned that loan demand remains tepid.
Investment banking fees soared 57%, beating analysts’ estimates and boosting net income to $14.3 billion, the most JPMorgan has ever earned for the first three months of the year. A larger-than-expected reserve release added to the windfall as the bank determined it didn’t need as much socked away for future loan losses.
Chairman and CEO Jamie Dimon said loan demand “remained challenged,” but he said government stimulus and potential infrastructure spending mean “the economy has the potential to have extremely robust, multiyear growth.”
Dimon said last week in his annual letter to shareholders that he’s optimistic the pandemic will end with a U.S. economic rebound that could last at least two years. He pointed to an “extraordinary” amount of spending power from both consumers and corporations as the country opens back up.
Investors are keen for signs that banks will soon expand their loan portfolios. Across the industry, card balances have been dwindling and deposits soaring after the U.S. government pumped trillions of dollars of stimulus into the economy in the past year. Businesses have also been reluctant to borrow until the pace of the economic recovery becomes clearer.
Loans fell 4% from a year earlier, driven by a 14% drop in credit-card loans. JPMorgan shares slipped 0.9% to $152.70 at 7 a.m. in early New York trading.
Investment banking fees jumped to $2.99 billion, topping the $2.59 billion analysts were expecting. The bank posted a $5.2 billion reserve release.
Equity underwriting more than tripled to $1.06 billion, beating expectations as JPMorgan rode the wave in
The bank’s traders generated $9.05 billion of revenue in the first quarter, up 25% from a year earlier. Trading revenue remained elevated after a banner year as the coronavirus pandemic roiled markets and sent volatility soaring.
