JPMorgan Chase beats analysts’ estimates as bank releases $5.2 billion in loan loss reserves

JPMorgan Chase on Wednesday reported profit and revenue that exceeded analysts’ expectations on robust trading results and a $5.2 billion benefit from releasing money it had set aside for loan losses that didn’t develop.

The bank posted first-quarter profit of $14.3 billion, or $4.50 a share including the $1.28 per share benefit from the reserve release, higher than $3.10 per share expected by analysts surveyed by Refinitiv. Revenue of $33.12 billion exceeded the $30.52 billion estimate.

Here are the numbers:

Earnings: $4.50 per share, vs. $3.10 per share expected by analysts polled by Refinitiv.
Revenue: $33.12 billion, vs. $30.52 billion expected.

JPMorgan Chase, the first major bank to report first-quarter earnings, will be closely watched for clues as to how the industry will emerge from the coronavirus pandemic.

One key question is whether banks will continue to release loan loss reserves — and the magnitude of those releases — that are no longer needed as the U.S. economic recovery gains pace. In the fourth quarter, JPMorgan beat expectations in part by releasing $2.9 billion in reserves.  

JPMorgan, with the world’s biggest Wall Street division by revenue, is also expected to benefit from robust investment banking fees driven by record issuance of SPACs, the blank check companies that saw more activity in the first quarter than all of 2020, itself a record year. Trading revenue is also expected to be a tailwind in the quarter.

Analysts will also be curious about the pace of share repurchases the bank is expected to make. Last month, the Federal Reserve said banks that pass the industry’s 2021 stress test will be allowed to resume higher levels of dividend payouts and buybacks starting June 30.

Shares of JPMorgan rose 21% so far this year, compared to the 25% advance of the KBW Bank Index.

This story is developing. Please check back for updates.