JPMorgan Chase reported a strong quarter of earnings resulting from a surge in mortgage lending. The latest quarter’s profit was up 34%, to $5.71 billion. The company reported earnings of $1.40 a share and revenue in the third quarter was $25.9 billion, an increase of 6% from the same quarter a year ago. JPMorgan is the nation’s largest bank in assets.
A multibillion-dollar trading loss in May rattled investors, attracted the scrutiny of federal law enforcement agents, and prompted the bank to claw back millions in compensation. Jamie Dimon, JPMorgan Chase’s chief executive, emphasized that JPMorgan had contained the fallout from the trading loss after closing out the position and limited the losses to the investment bank on the remainder of the trade. The losses on the trade were $449 million in the third quarter, resulting in a total loss of $6.25 billion for the year.
JPMorgan’s earnings were propped up by an increase in mortgage lending. Its mortgage banking unit reported a profit increase of 57% from a year earlier. New home loans and refinancings hit $47 billion, up 29% from the same period a year earlier. Mr. Dimon said, “We believe the housing market has turned the corner.” However, Mr. Dimon noted that a large swath of the new originations came from a burst of refinancing activity, with refinancings accounting for roughly 75% of the quarter’s mortgage volume. Mr. Dimon also warned that defaults could continue, leaving the bank to shoulder higher costs.
The bank saw robust growth across its business units and showed signs of strength throughout its core lending businesses. The commercial banking group reported record revenue. The card services and auto business reported profits of $954 million, an increase of 12%. The credit card sales volume rose 11% over the previous year, strengthening the broader unit. The bank also reported that write-offs of soured card loans fell to 3.6%, from 4.7% the previous year. Those trends echo a pattern across the United States, where delinquencies on credit cards stood at 2.32% in August, down from 3.04% a year earlier.