JP Morgan's profit has dipped though it has still managed to beat analyst expectations in the first quarter

Billy Bambrough
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JP Morgan Chase CEO Jamie Dimon Testifies At House Financial Services Hearing
Jamie Dimon, chairman and chief executive of JP Morgan, has steered the bank through five consecutive quarters of expectation beating results (Source: Getty)

JP Morgan has surprised investors with its latest results coming in ahead of expectations.

Overall profits came in at $1.35 a per share, on revenue of $24.1bn (£16.92bn). Analysts were expecting earnings per share of $1.24 on revenue of $23.80bn, according to a Bloomberg poll.

This time last year JP Morgan, the largest bank in the US by assets, reported earnings of $1.61 a share on revenue of $24.8bn for the first quarter of 2015.

Profit for the bank's first quarter of 2016 hit $5.5bn, a decrease of seven per cent year on year, while net revenue was $24.1bn, down three per cent.

Shares in the bank climbed by almost three per cent in pre-market trading. JP Morgan has now beaten forecasts for the last five quarters.

Loans to the energy industry have sent JP Morgan's provision for credit losses soaring.

The total set aside in over the last three months was $1.8bn, compared with $959m in the prior-year quarter.

The provision for credit losses was $459m, compared to a benefit of $31m in last years quarter, mostly due to higher reserves for its oil and gas, and metals and mining portfolios.

Corporate and investment banking division

The bank's all important corporate and investment banking division suffered a fall in earnings in what is traditionally the best three months for investment banking.

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Net income was $2bn, a decrease of 22 per cent, while net revenue was $8.1bn, a decrease of 15 per cent. Banking revenue was $2.4bn, down 19 per cent. Investment Banking revenue was $1.2bn, down 24 per cent.

Jamie Dimon, chairman and chief executive, warned that the industry remains challenging.

While challenging markets impacted the industry, we maintained our leadership positions and market share in the corporate and investment bank and asset management, reflecting the strength of our platform. Even in a challenging environment, clients continue to turn to us in the global markets and we saw positive net long-term asset flows in asset management.

Consumer banking

JP Morgan has continued to increase its revenue from its retail banking division.

‚ÄčNet income was $2.5bn, an increase of 12 per cent. Net revenue was up by four per cent year on year at $11.1bn, though down one per cent over the prior quarter.

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Excluding approximately $200m of gains from the Square IPO and a branch sale in the prior quarter, net revenue would have been up one per cent on the previous quarter.

Dimon said:

We delivered solid results this quarter with strong underlying drivers. The consumer businesses continue to grow loans and deposits impressively, attracting deposits faster than the industry. The US consumer remains healthy and consumer credit trends are favorable.

Investors welcomed plans for the bank to increase its share buybacks in the coming quarter.

"We plan to increase capital return in the first half of 2016 as the board approved an incremental $1.9 billion in share buybacks," said Dimon.

Earlier today it was reported that JP Morgan its to cut 30 jobs, or five per cent of its headcount, at its Asia wealth management business.

A source told Reuters that the bank was looking to sharpen its focus on tapping wealthier clients.

The job cuts are expected to affect the bank's Singapore and Hong Kong offices.

Yesterday Japanese banking giant Nomura cut jobs across its European operations, with hundreds of jobs being lost in London.

JP Morgan is the first US bank to report its first quarter earnings. Tomorrow Bank of America and Wells Fargo will report their first quarter earnings, with Citi posting its numbers on Friday.

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