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Consumer bank lifts JPMorgan’s profit

JPMORGAN Chase & Co’s third-quarter profit rose 7 percent from a year earlier, as the bank was able to increase revenue in its consumer banking business even though the company had to set aside additional funds to cover bad loans, most notably in its credit card division.

The biggest bank by deposits and assets said yesterday it earned a profit of US$6.73 billion, or US$1.76 per share, compared with US$6.29 billion, or US$1.58 a share, in the same period a year earlier. The results beat analysts’ hopes, who were looking for JPMorgan to earn US$1.65 a share, according to FactSet.

JPMorgan’s consumer bank was the driver of this quarter’s growth, reporting a 16 percent rise in net income. The bank saw higher deposit growth and increased revenue in its credit card division, which the bank has been expanding aggressively in the last year with a new high-end credit card known as Chase Sapphire Reserve. Charge-offs in that business have been creeping steadily higher for several quarters, however, and the bank had to set aside an additional US$300 million to cover potential losses.

Despite the creep up in delinquencies, “the US consumer remains healthy,” JPMorgan Chase CEO Jamie Dimon said in a statement.

The gains in JPMorgan’s consumer banking division were more than enough to make up for declines in corporate and investment banking, its other major business. That division suffered a 13 percent fall in profits from a year earlier, mostly due to lower trading revenues. Bond trading revenue slumped 27 percent and stock trading revenue fell 4 percent, the bank said. Revenue across the bank was US$26.2 billion on a managed basis.

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