JPMorgan shares hit record after beating forecasts

JPMorgan Chase reported a boost to its trading revenues, and its profits, as it opened Wall Street's first-quarter earnings season for 2015 - sending shares in the US bank to a record high.

Net income was up 12 per cent year-on-year at $5.9bn as revenue rose 4 per cent to $24.8bn. Earnings per share were $1.45 compared with $1.28 a year earlier.

Analysts had expected net income of $5.4bn and earnings per share of $1.41 - making this only the second time that JPMorgan had exceeded estimates in seven quarters. For much of that period, the performance of the bank - the largest in the US by assets - was dragged down by chronic legal and regulatory costs.

In the first quarter, there was an additional legal expense of $487m - a reminder that JPMorgan is still to resolve outstanding investigations, including a justice department's probe into the manipulation of foreign exchange markets and an inquiry into its hiring practices in Asia.

Marianne Lake, chief financial officer, said the bank was in talks with the justice department and hoped to reach "an acceptable resolution over the coming weeks".

Even so, JPMorgan's corporate and investment banking division produced enough revenue to overcome the latest spike in expenses. Investment banking fees jumped 22 per cent, while net income at the division rose 19 per cent to $2.5bn. Trading revenues were up 9 per cent year-on-year at $5.7bn, with a 22 per cent increase in equities business and a 5 per cent increase in fixed income.

Shares in JPMorgan rose 1.59 per cent to $63.06 by the close of trading - a new high for the bank in its current form and the highest level since its predecessor institution, Chase Manhattan, surpassed $64 at the height of the dotcom bubble in 2000.

Stronger revenues in equities and fixed income trading at JPMorgan will be seen as a positive sign for peers such as Citigroup, Bank of America, Goldman Sachs and Morgan Stanley, all of which report earnings in the next few days.

It contrasts with a slightly weaker performance than anticipated in traditional banking, both at JPMorgan and at Wells Fargo, where net income fell year-on-year for the first time since 2008.

Wells Fargo's 2 per cent decline in net income to $5.8bn marked a rare slippage for a bank that has become a byword for dependability since the financial crisis. Its net income had risen metronomically from a low of $2bn in the first quarter of 2008. Shares in Wells Fargo fell 0.73 per cent to $54.19 by the close.

Both banks saw a tight squeeze in their net interest margins - the spread between the rates at which they borrow and lend. They narrowed to razor-thin levels of 2.07 per cent at JPMorgan and 2.95 per cent at Wells Fargo.

One consolation from ultra-low rates came in a surge in fees from customers refinancing their mortgages. At JPMorgan, mortgage originations were up 45 per cent year-on-year at $24.7bn.

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