JPMorgan earnings leave Goldman in the shade

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Record funding banking charges helped JPMorgan Chase retain its Wall Street crown on Tuesday, whereas rival Goldman Sachs was knocked by a 27 per cent drop in earnings following losses on tech investments akin to WeWork and Uber.

JPMorgan, the US’s greatest financial institution, and buying and selling powerhouse Goldman bookended a bumper earnings day for US banks that additionally included lacklustre third-quarter outcomes from Citigroup and Wells Fargo.

JPMorgan was the standout performer of the 4 massive banks, with internet revenue rising eight per cent to $9.1bn. Revenues had been up eight per cent to $29.3bn in the three months to finish September. Both numbers beat analyst expectations, and JPMorgan was rewarded with a four per cent rise in its share worth by lunchtime in New York.

“JPMorgan is best in class of global banks and it shows this quarter,” mentioned Wells Fargo analyst Mike Mayo. The outcomes included the greatest third quarter ever for JPMorgan’s funding banking division, which dealt with the catastrophic try to float WeWork, and several other different listings that plunged in worth after they begun buying and selling.

Jamie Dimon, JPMorgan’s chief government and chairman, repeatedly declined to touch upon the financial institution’s relationship with WeWork, however Jenn Piepszak, finance chief, mentioned the monetary influence of the group’s scenario was “not material” for the financial institution and “within our risk appetite”.

“We continue to support our client through a complex situation and are working with them through alternative financing strategies,” she mentioned.

Ms Piepszak added that though the pipeline of funding banking offers was robust, fourth-quarter charges had been anticipated to be decrease than the third quarter of 2019 and the fourth quarter of 2018.

Tuesday, 15 October, 2019

Other elements of the financial institution additionally carried out strongly, together with a 25 per cent improve in revenues from fastened revenue buying and selling revenues towards a yr in the past, and a 10 per cent rise in bank card gross sales volumes. Mr Dimon mentioned the outcomes demonstrated “broad-based strength and the resilience of our business model despite a more challenging interest rate backdrop”. However, he struck a word of warning for the future, warning that US financial progress had “slowed slightly”.

At Goldman, the place buyers eagerly await a strategic plan in January, third-quarter internet revenue of $1.8bn was dragged decrease by $80m of losses on the financial institution’s proprietary stake in WeWork and $267m of provisions towards stakes it holds in publicly listed firms, akin to Uber, Tradeweb and Avantor.

Goldman’s funding banking charges had been down 15 per cent yr on yr to $1.69bn, in distinction to JPMorgan’s eight per cent rise, and Citigroup’s four per cent rise. Markets revenues had been a brilliant spot for Goldman, rising 6 per cent yr on yr to $three.29bn. Goldman’s shares fell as a lot as three.three per cent in early buying and selling, earlier than rebounding to commerce flat in a session throughout which the Dow Jones US banks index was up practically three per cent.

David Solomon, Goldman chief government, mentioned it could take time for the financial institution to reap rewards from investments akin to on-line financial institution Marcus and its Apple bank card. “I do believe, over time, markets will reward us,” he mentioned.

Marty Mosby, an analyst at Vining Sparks, mentioned he was not too involved about the outcomes, as Goldman was “investing in the rollout of their consumer bank, which should help generate higher returns in 2020”.

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