JPMorgan results trump estimates as election stimulates trading

REUTERS - JPMorgan Chase & Co, the No. 1 U.S. bank by assets, reported stronger-than-expected quarterly earnings and revenue on Friday, helped by a surge in investor activity related to the U.S. presidential election.

The bank's net income rose 23.8 percent to $6.73 billion in the three months ended Dec. 31, while earnings per share rose to $1.71 from $1.32. (http://bit.ly/2jeHFAY)

Excluding items, the bank earned $1.58 per share, handily beating the average analyst estimate of $1.44 per share, according to Thomson Reuters I/B/E/S.

"We grew market share in virtually all of our businesses and showed expense discipline while continuing to invest for the future," Chief Executive Jamie Dimon said in a statement.

"The U.S. economy may be building momentum," he added. "Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities."

Donald Trump's stunning victory on Nov. 8 set off a wave of trading in stocks and bonds during what is normally a slow period for trading desks at big banks.

Bank of America Corp, the second-largest U.S. bank, kicked off the quarterly earnings period for big U.S. lenders earlier on Friday, announcing a 46.8 percent rise in profit.

The banks were also reporting their first results since the Federal Reserve raised its key interest rate target for the second time since 2006 on Dec. 14.

Higher interest rates are usually good for banks, allowing them to charge higher rates on loans.

Revenue from fixed-income trading - JPMorgan's most volatile business - rose about 31 percent to $3.37 billion, while stock trading revenue increased 8.1 percent to $1.15 billion.

That helped boost total net revenue by 2.5 percent to $24.33 billion, beating analysts average estimate of $23.95 billion.

JPMorgan's shares, which up to Thursday had risen about 23 percent since the election, were little changed in premarket trading. Bank stocks have been on a tear on the expectation that profits will be boosted by Trump's plans to cut corporate taxes, ease regulatory restraints and boost infrastructure spending. The Federal Reserve, which raised interest rates by 0.25 percentage points in December, is expected to raise them again three times this year.

JPMorgan said its fourth-quarter return on tangible common equity, a key performance measure, was 14 percent up from 11 percent a year-earlier.

Total noninterest expenses fell 3 percent to $13.83 billion, primarily driven by lower legal expenses.

Also on Friday, Wells Fargo, the largest U.S. mortgage lender, reported a 6.4 percent fall in profit. Citigroup Inc, Goldman Sachs Group Inc and Morgan Stanley report earnings next week.

(Reporting by Sweta Singh in Bengaluru and David Henry in New York; Editing by Ted Kerr)