JPMorgan Chase & Co. (NYSE:JPM) is reporting a third quarter earnings drop of 4%. The bank was hurt by investment banking clients sitting on the sidelines observing the European debt crisis. Results for the firm were helped by an accounting gain the bank can take when financial markets are volatile. Shares of the second-biggest U.S. bank fell 1.5 percent to $32.70 in pre-market trading Thursday.
The results by JP Morgan are the first for the quarter from a major U.S. bank and underscore just how investment bank revenue has been hammered by the market turmoil. Although earnings are down, JPMorgan bought back $4.4 billion of stock during the quarter.
JPMorgan said earnings were $4.3 billion, or $1.02 per share, down from $4.4 billion, or $1.01 per share, in the same quarter last year. The bank’s outstanding share count fell 3 percent because the company bought back stock. “All things considered, we believe the firm’s returns were reasonable given the current environment,” JPMorgan’s Chief Executive Jamie Dimon said in a statement.
As a diversified bank, JPMorgan is seen as an indicator for the financial industry, and it was among the first banks to prompt analysts to start cutting earnings estimates when it warned of a sharp fall-off in its Wall Street businesses in early September.
Regarding JPMorgan’s balance sheet, Dimon commented: “We maintained our fortress balance sheet, ending the third quarter with a Basel I Tier 1 Common ratio of 9.9%. Our strong capital position allowed us to repurchase $4.4 billion of common stock2 during the third quarter. We estimate that our Basel III Tier 1 Common ratio was approximately 7.7% at the end of the third quarter. Our total firm-wide credit reserves remained relatively flat compared with the prior quarter at $29.0 billion, resulting in a firm-wide coverage ratio of 3.74% of total loans1. The Firm’s total deposits increased to $1.1 trillion, up 21% compared with the prior year.”
Share of JPMorgan are trading down 4.04% or 31.85 in early morning trading.