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JPMorgan Chase Q1 Earnings Blow Past Estimates After Huge Reserve Release

JPMorgan Chase (NYSE: JPM) reported first-quarter earnings this morning that blew past analysts' estimates after the bank released billions from its previously built-up reserves.

America's largest bank by assets reported a profit of $14.3 billion, or $4.50 in earnings per diluted share, on total revenue of nearly $32.3 billion. The street had only expected JPMorgan on average to report $3.10 in EPS on total revenue of roughly $30.5 billion.

The $4.50 in EPS is also up nearly 470% from the first quarter of 2020, while total net revenue is up more than $4 billion year over year.

CEO Jamie Dimon noted that spending in its consumer bank has returned to pre-pandemic levels and is up 14% versus the first quarter of 2019. Travel and entertainment spend in March also grew 50% from February.

"With all of the stimulus spending, potential infrastructure spending, continued Quantitative Easing, strong consumer and business balance sheets and euphoria around the potential end of the pandemic, we believe that the economy has the potential to have extremely robust, multi-year growth," Dimon said in a statement.

Image source: JPMorgan Chase.

The big reason for the stellar earnings came from JPMorgan's $5.2 billion release from its built-up reserves for potential loan losses.

The excess reserves, which added an extra $1.28 to the bank's earnings per share, made their way back onto the income statement through a negative provision, which essentially means they went back as profits.

The release came after the bank concluded that previously projected loan losses, particularly among its credit card customers, are not going to materialize.

JPMorgan also saw its corporate and investment bank and its asset and wealth management divisions perform extremely well.

Investment banking fees climbed 222% from the first quarter of 2020, while fixed-income markets and equity markets revenue also came in strong.

In asset and wealth management, the bank saw total assets under management and total client assets climb significantly, which drove higher management fees. Credit quality remained stable.

Shares of JPMorgan were down in pre-market trading as of 8:15 a.m. today.

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