JPMorgan Chase & Co. posted strong earnings in third quarter, and it also had a successful quarter — and year — recruiting financial advisers
JPMorgan Chase & Co. posted strong earnings in third quarter, and it also had a successful quarter — and year — recruiting financial advisers.
At the end of the third quarter, the bank had 2,209 financial advisers, a 7% rise from the second quarter and a 17% rise from the third quarter of 2009, according to its earnings supplement. The number of financial advisers has increased by 300 in the past 12 months.
The company also reported a total of 418 securities brokers at the end of the third quarter, up 15% from 365 a year earlier. That increase reflects the integration of the business formerly known as Bear Stearns Private Client Services, which JPMorgan acquired in 2008 and officially joined operations at the start of this year.
More broadly, JPMorgan Chase & Co. said profit rose 23%, exceeding analysts' estimates, as provisions for bad loans shrank. Revenue slumped 11%.
Third-quarter net income climbed to $4.42 billion, or $1.01 a share, from $3.59 billion, or 82 cents, in the comparable period a year earlier, the company said last week in a statement. Twenty-two analysts surveyed by Bloomberg had estimated adjusted earnings of 88 cents a share.
Profit margins at JPMorgan narrowed as revenue from investment banking and card services tumbled from a year earlier, and non-interest expenses rose 7%. Provisions for losses on mortgages, credit cards and other consumer loans fell $5.8 billion.
JPMorgan, the country's second-biggest bank by assets, said revenue fell to $23.8 billion from $26.6 billion a year earlier. Managed revenue, which includes the effect of some tax-exempt securities, was $24.3 billion, compared with $28.8 billion.
Banks are struggling to curb costs as they deal with litigation stemming from the global credit crisis, prepare for new capital requirements and adjust to U.S. laws banning trades with their own money and capping credit card charges and overdraft fees. At JPMorgan, the overhead ratio, or expenses divided by revenue, climbed to 60%, from 58% in the second quarter and 51% a year earlier.
The bank set aside $1.3 billion of additional litigation reserves during the quarter, which includes expenses for “mortgage-related matters,” it said in the statement.
“You know our society, right?” chief executive Jamie Dimon, told analysts last week on a conference call when asked about mounting court costs.
While provisions for future losses fell, JPMorgan charged off $1.2 billion on home-equity and other mortgage loans as the U.S. unemployment rate remained near a 26-year high. It also took a $1.5 billion loss on bad loans it was forced to repurchase from investors.
“We expect mortgage credit losses to remain at these high levels for the next several quarters,” Mr. Dimon said in the statement. “If economic conditions worsen, mortgage credit losses could trend higher.”
Net income in investment banking declined 33% to $1.29 billion in the third quarter, from $1.92 billion a year earlier, even after benefiting from the release of $142 million in reserves back into earnings.
This story was supplemented with reporting by Bloomberg News.
