JPMorgan beats Wall Street expectations in tough quarter for banks

Wed Apr 13, 2016 12:54pm EDT
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By Sweta Singh and David Henry

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote), the No. 1 U.S. bank by assets, reported a quarterly profit that topped low market expectations as lower costs and better-than-expected trading revenue helped soften the blow from a fall in investment banking fees.

The drop in profit was the first in five quarters, but investors focused on the positives, helping to boost the shares of the bank and those of its rivals on Wednesday.

JPMorgan is the first U.S. bank to report results for what has generally been seen as the banking industry's worst start to a new year since the 2007-2008 financial crisis.

Banks around the world have been hit by a slide in commodity and oil prices, a slowdown in China, near-zero interest rates, mounting regulatory costs and hefty capital requirements.

JPMorgan's chief financial officer, Marianne Lake, said the bank may boost provisions to cover soured energy loans by another $500 million this year, on top of the $529 million taken in the first quarter.

Lake said there was a "high degree of variability" in that estimate, but added that the bank was not seeing signs of a broad contagion and did not expect to endure significant losses.

Even though oil prices have recently improved a bit, this was not enough to help the sector recover, Lake said on a call with analysts. Much of JPMorgan’s exposure relates to natural gas, whose prices remain depressed, she said.

JPMorgan's exposure to oil and gas loans stood at about $44 billion as of Dec. 31.   Continued...

People walk by the JP Morgan & Chase Co. building in New York in an October 24, 2013 file photo.  REUTERS/Eric Thayer/Files