JPMorgan Chase posted a 52% jump in its first quarter profits, helped by higher interest rates, which allowed the bank to charge customers more for loans.
The bank saw deposits grow noticeably, as business and customers flocked to the banking titan after the failure of Silicon Valley Bank and Signature Bank.
With JPMorgan’s strong results, as well as solid results from Wells Fargo on Friday, there seem to be few signs of potential trouble in the banking system – at least among the nation’s biggest, most complex financial institutions.
The nation’s biggest bank by assets posted a profit of 12.62 billion dollars (£10.09 billon), compared with a profit of 8.28 billion dollars (£6.62 billion) in the same period a year earlier.
On a per-share basis, the bank earned 4.10 dollars (£3.27) a share, up from 2.63 dollars (£2.10) a share a year ago, beating analysts’ expectations.
Most of the profit growth came from higher interest rates. The bank’s net interest income was 20.8 billion dollars (£16.63 billion) in the quarter, up 49% from last year.
$JPM reports 1Q23 net income of $12.6B and EPS of $4.10 with an ROTCE of 23%.
— J.P. Morgan (@jpmorgan) April 14, 2023
JPMorgan grew deposits by 37 billion dollars (£29.58 billion) during the quarter, up to 2.4 trillion (£1.91 trillion).
Deposits at big banks had been falling for several quarters as consumers spent down their pandemic savings and businesses tapped into their stored cash to pay bills.
But with the collapse of Silicon Valley Bank and Signature Bank in March, businesses have been withdrawing their funds from smaller banks and moving them into the larger banks, which are considered “too big to fail” and have an implicit government backstop.
JPMorgan and chief executive Jamie Dimon have been the industry’s go-to problem solvers for banking issues for years now.
After the failure of Silicon Valley Bank and Signature Bank, JPMorgan helped put together a consortium of other big banks to keep First Republic Bank from being next to fail.
The group of banks put 30 billion dollars (£23.99 billion) in uninsured deposits into the bank, which appears to have at least bought First Republic some time to repair its balance sheet and maybe find a buyer.
“Our years of investment and innovation, vigilant risk and controls framework, and fortress balance sheet allowed us to produce these returns, and also act as a pillar of strength in the banking system and stand by our clients during a period of heightened volatility and uncertainty,” Mr Dimon said in a statement.
