J.P. Morgan earnings Q1 2019

J.P. Morgan Chase reported record first-quarter profit and revenue that exceeded analysts’ expectations as the bank benefited from the Federal Reserve’s December rate hike.

The company said profit rose 5 percent to $9.18 billion, or $2.65 a share, compared with analysts’ average estimate of $2.35 a share. Revenue also rose 5 percent to $29.9 billion, exceeding estimates by $1.5 billion as net interest income grew 8 percent, thanks to the “impact of higher rates,” J.P. Morgan said Friday.

“We had record revenue and net income, strong performance across each of our major businesses and a more constructive environment,” CEO Jamie Dimon said in a statement. “Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong.”

J.P. Morgan, the biggest U.S. bank by assets, is the first major lender to report earnings. The company is closely watched by investors looking for signs of how the industry’s Main Street and Wall Street businesses did in the period.

Bank stocks under-performed the broader market in the first quarter after the Federal Reserve said in March that it was pausing rate hikes for the remainder of the year. The abrupt shift – three months after the Fed signaled two increases for 2019 – roiled bond markets, leading to lower yields on long-term Treasuries than some shorter-term debt. That punished bank stocks, as a so-called inverted yield curve hurts the industry’s profit margins and signals a possible recession on the horizon, which would cause more loan losses.

At J.P. Morgan, led by CEO Jamie Dimon, analysts are watching to see if it can resume its pattern of exceeding analysts’ profit expectations. In the fourth quarter, the bank under delivered for the first time in more than 15 straight quarters.

J.P. Morgan’s trading division is unlikely to help in that department. The bank said in February that quarterly trading revenue was headed for a “high-teens” percentage drop from a year earlier as both equities and fixed income desks struggled amid slower client activity.

Nonetheless, the bank continued making long-term investments in its business. J.P. Morgan said it’s expanding its branch network to cover nearly all of the U.S. population by 2022. It also announced the first cryptocurrency from a major U.S. bank, and pledged $350 million to boost the job prospects of people in under-served communities.

Here’s what Wall Street expected:

Earnings: $2.35 per share, a 0.7% decline from a year earlier, according to Refinitiv.

Revenue: $28.4 billion, a 0.3% decline from a year earlier.

Net Interest Margin: 2.57%, according to FactSet

Trading Revenue: Fixed income $3.64 billion, Equities $1.76 billion

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