JPMorgan Chase & Co. posted a nearly fivefold increase in quarterly profit thanks to booming markets and an economic recovery that allowed it to free up $5.2 billion in funds it had set aside to cover soured loans.
The nation’s largest bank reported a record quarterly profit of $14.3 billion, or $4.50 per share, well above the $3.10 per share forecast by analysts polled by FactSet. A year earlier, JPMorgan reported a quarterly profit of $2.87 billion, or $0.78 a share. The bank reported revenue of $32.27 billion, up 14% from a year earlier.
After the coronavirus pandemic took hold in the U.S. early last year, JPMorgan and other big banks set aside billions of dollars in loan-loss reserves to prepare for a potential flood of consumer and business defaults. The rainy-day funds ate into quarterly profits for much of 2020. But big losses never materialized, and now banks are now cashing in on their diligence.
Wall Street also powered JPMorgan’s first-quarter results. Corporate and investment bank profit nearly tripled to $5.74 billion, a quarterly record, and revenue rose 46% to $14.6 billion. Trading revenue rose 25% from a year ago, and investment-banking fees rose 57%.
The U.S. economy’s rebound has surpassed banks’ internal forecasts. Banks believe the trillions of dollars in government stimulus coursing through the economy, coupled with accelerating vaccine distribution, has insulated consumers and businesses from the pandemic’s worst-case financial scenarios.