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JPMorgan Reports Steady Core Business Growth in 3rd Quarter

- By James Li

JPMorgan Chase & Co. (JPM), a major U.S. financial institution, said third-quarter revenues increased 3% from the prior year as the company reported strong growth in U.S. deposits and number of customers.

The New York-based company reported an 11% return on equity (ROE) and a 13% return on tangible equity (ROTE), both outperforming over 60% of global competitors.


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Company reports strong growth in consumer banking

Consumer and business banking revenues increased 15% year over year due to strong deposit margins and consumer loyalty. CEO Jaime Dimon said JPMorgan "led the nation in total U.S. deposits" during the quarter as customers continue to view the bank as their "partner of choice." The company averaged $646 billion in deposits, up 9% from the prior-year quarter.

Dimon also mentioned strong growth in average core loans, which increased 8% from the prior-year quarter. Credit card sales and merchant processing volumes both increased 13% year over year, contributing to a 7% increase in card, commerce solutions and auto revenues. Such results contributed to a 19% return on equity for the company's consumer banking business.

Company offers strong growth potential across all business segments

JPMorgan also reported strong growth in other business segments, including corporate and investment banking, commercial banking and asset and wealth management. The company achieved equity returns of 13%, 17% and 29% during the quarter for the above three segments, driven by record revenues and / or net earnings.

Dimon mentioned that even though natural disasters like Hurricanes Harvey and Irma impacted many of the bank's customers, the global economy still produces solid performance around the world. The CEO also announced initiatives in Chicago and Washington D.C. to unlock economic growth and expand the company's growth potential in other communities. Such initiatives can further increase the bank's profit margins, which are currently near a 10-year high and outperform over 60% of global competitors.

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Spiros Segalas (Trades, Portfolio) invested in 1,335,112 shares of JPMorgan during the third quarter as the company offers good short-term growth potential. Based on GuruFocus estimates, the Harbor Capital fund manager gained approximately 8% on the stock.

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Disclosure: The author has no positions in JPM.

This article first appeared on GuruFocus.