Weak trading hits JPMorgan, profit falls in three core businesses

Tue Oct 13, 2015 6:52pm EDT
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By Sweta Singh and Richa Naidu

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote), the biggest U.S. bank by assets, reported a 6.4 percent decline in revenue and profit declines in three of its four main businesses, underscoring how weak trading markets and low interest rates have hurt banks in recent months.

Like other banks, JPMorgan has been struggling to increase revenue in the face of weak demand for loans and low interest rates, which have been stuck near zero for overnight funds since December 2008.

Trading was particularly volatile during the quarter as worries about the impact of an economic slowdown in China roiled financial markets, discouraging investors from making big bets and muddying the outlook for U.S. interest rates.

Chief Financial Officer Marianne Lake offered little hope that conditions would improve anytime soon, saying on a conference call that analyst estimates for the current quarter appeared to be too high in light of slow market trading.

The lender, kicking off third-quarter results for big U.S. banks, managed a 22 percent rise in net income but this was mainly due to a tax benefit and lower spending on employee pay.

The bank, whose shares were little changed in extended trading on Tuesday, said net income fell in its commercial banking, asset management, and corporate and investment banking businesses. The only unit to post a higher profit was consumer and community banking, where net income rose 4 percent.

Revenue from trading fixed income, currencies and commodities fell 22.6 percent to $2.93 billion. Adjusted for the sale of a physical commodities business and other changes, revenue from fixed-income trading would have fallen 11 percent.

"When you look at other companies that will report I expect it's going to be exactly the same situation," said Michael Yoshikami, who oversees $1.5 billion as chief executive of Destination Wealth Management in Walnut Creek, California.   Continued...

A view of the exterior of the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City, May 20, 2015. REUTERS/Mike Segar