The bank improved its profits thanks to the increase in rates and the acquisition of First Republic Bank, which brought its interest income to an all-time high.
US bank JPMorgan Chase’s profits grew in the third quarter thanks to the increase in rates and the acquisition of First Republic Bankwhich brought its interest income to an all-time high, reported the largest American lender.
According to the bank, net interest income rose 30% to $22.9 billion while JPMorgan’s investment banking revenue fell 6% to $1.6 billion. It also raised its 2023 net interest income forecast to $89 billion, excluding markets, from a previous forecast of $87 billion. Meanwhile, the provision for credit losses was $1.4 billion, 10% less than last year, after the bank released $113 million in reserves.
JP Morgan shares on the rise
Consequently, The bank’s shares rise 1.83% this Friday on Wall Street. The lender posted a profit of US$13.15 billion, or US$4.33 per share, in the three months ended September 30. This figure contrasts with the US$9,740 million, or US$3.12 per share, from the previous year.
JP Morgan’s good dynamics respond to the fact that the Federal Reserve’s interest rate increases have boosted banks’ net interest income, that is, the difference between what they earn on loans and what they pay for deposits.
The entity’s chief executive, Jamie Dimon, said this Friday that, although American consumers remained in good health, several geopolitical factors, such as the war in Ukraine and the conflict in Israel, could keep inflation at high levels. “This may be the most dangerous moment the world has seen in decades,” Dimon said.
The purchase of First Republic Bank
JPMorgan bought First Republic in May at a government auction, after weeks of failed rescue attempts and aborted talks involving some of the most powerful Wall Street executives and American officials.
Although the mergers and acquisitions (M&A) and initial public offerings (IPO) market show signs of recovery, persistent economic uncertainty remains a drag on deal activity.
In September, several renowned companies debuted on the stock market, including the chip designer Arm Holdings of the SoftBank group. and the grocery delivery app Instacart. JPMorgan underwrote both IPOs.
But these newly public companies have given up most of their profits following their successful debuts, dimming hopes for a significant recovery in the IPO market.
Source: Ambito
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