JPMorgan Chase & Co today beat forecasts for revenues and profits as global bond and currency markets roared back to life in the third quarter following Britain's vote to leave the European Union.
Brexit-inspired volatility along with changing expectations for monetary policy in the US, Europe and Japan as well as money market reforms boosted trading revenue by 21% for JPMorgan.
It also resulted in the bank's pretax profit jump by one-third. JPMorgan is the biggest bank in the US by assets.
The bank said its after tax income dropped 7.6% after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier.
Both revenues and profits topped analysts' estimates.
Earnings per share fell to $1.58 from $1.68 a year ago. Analysts, on average, expected $1.39, according to Thomson Reuters I/B/E/S.
JPMorgan is the first big US bank to report third-quarter results and its performance gave Wall Street a shot in the arm. Wells Fargo and Citigroup, the third and fourth biggest US banks by assets, also reported results on Friday.
Citi earnings per share and revenues topped estimates. Wells Fargo earnings beat expectations.
Bank of America, the second biggest, will report on Monday.
In addition to a fillip from Brexit, US banks got a boost from a rise in the London interbank offered rate, or Libor, a benchmark for over $300 trillion worth of financial products worldwide.
Libor moved to a seven-year high during the third quarter as US money market funds scaled back holdings in short-term bank debt in advance of new regulations.
JPMorgan said its total revenue rose 8% to $25.51 billion, beating the average estimate of $23.99 billion.
With interest rates at record lows, the banking sector has relied on growing its loan book to boost income.
However, total provisions for bad loans rose 86.4% to $1.27 billion. JPMorgan posted higher provisions for losses as it added loans and recorded charge-offs for oil and gas loans.
Core loans in its commercial banking business grew 14% and JPMorgan said it expects income from lending to be up modestly in the fourth quarter.
The Fed last raised rates in December, by 0.25 percentage points, after keeping them near zero for almost a decade.
At the start of the year, further rate hikes were widely expected, but now Wall Street expects just one increase in December and possibly one more in 2017.
