New York (AFP) – US banking giant JPMorgan Chase announced better-than-expected net income for the first quarter of 2016 Wednesday, despite taking another hit from its exposure to the commodity rout.
The bank, the largest in the United States, said it also suffered from a tough environment for investment banking and securities trading, but was helped by the consumer’s robust appetite for credit.
Wall Street has been girding for a bruising quarter of earnings results. Major banks face a number of headwinds, including central banks’ use of ultra-low and negative interest rates, which dent bank profits.
JPMorgan reported net income for the first quarter was $5.5 billion, down 6.7 percent from the year-ago period. That translated into $1.35 per share, nine cents above analyst expectations.
Revenues dipped 3.0 percent to $24.1 billion.
Shares of JPMorgan, the first major bank to report earnings so far, jumped 3.3 percent in early trade to $61.21.
Chief executive Jamie Dimon said the largest US bank by assets “delivered solid results this quarter with strong underlying drivers” despite a “challenging environment.”
Dimon dismissed the odds of a US recession in 2016.
“The US economy continues to plug along, not as fast as we all want it to, but consumers are strong and companies still have plenty of cash,” he told reporters on a conference call.
JPMorgan businesses registering lower earnings included corporate and investment banking, which suffered as revenues fell for equity trading, fixed-income trading and some other categories.
JPMorgan lifted its reserves set aside for bad loans by $713 million due to downgrades of $529 million in oil and gas and natural gas pipelines and $162 million in metals and mining.
Oil prices have risen back above $40 a barrel this week. In spite of those gains, JPMorgan may still need to book another $500 million in costs due to the oil downturn, said JPMorgan chief financial officer Marianne Lake.
Lake said there was “a high degree of variability” on the exact figure of future losses.
Helping JPMorgan’s results were higher earnings from consumer and community banking in such categories as consumer credit cards and auto loans. Total loans were up 11.9 percent at $448.8 billion.
Executives said they were committed to winning approval from US regulators for its “living will” plan after the Federal Reserve and the Federal Deposit Insurance Corporation rejected JPMorgan’s plan Wednesday.
JPMorgan is one of eight “too big to fail” banks required to file a contingency plan to avoid taxpayer bailouts if they fail. The requirements were enacted after the 2008 financial crisis.
“The most important thing is that we work with the regulators to understand their feedback in more detail and we’re fully committed to meeting their expectations,” Lake said.
“We believe it is in everyone’s best interest to end the debate on ‘too big to fail.’”
Four other large banks also failed the “living will” test: Bank of America, Bank of New York Mellon, State Street and Wells Fargo. Regulators ordered all five banks to submit acceptable plans by October 1 or potentially face stricter capital and leverage requirements, among other remedies.