NEW YORK — Wall Street giant JPMorgan Chase & Co. reported the highest quarterly profit in its history Friday, with a big assist from the new tax law passed late last year.
JPMorgan Chase, the nation’s largest bank by assets and deposits, had a profit of $8.71 billion in the first quarter, a jump of 35 per cent from a profit of $6.45 billion in the same period a year earlier. On a per-share basis, JPMorgan earned $2.37 a share, up from $1.65 per share, beating analysts’ forecasts.
JPMorgan’s results were driven by two factors: higher interest rates, which have allowed banks such as JPMorgan to charge more for customers to borrow, and a much lower corporate tax rate.
While JPMorgan’s pretax income rose by $2 billion in the quarter, the company said it effectively paid $240 million less in taxes compared to a year earlier. The bank’s effective tax rate was 18.3 per centin the quarter, compared with the 22.7 per cent effective tax rate it paid a year earlier. Before the new tax law, JPMorgan’s average tax rate was in the high 20 per cent range.
JPMorgan Chief Executive Officer Jamie Dimon has been a big promoter of the new tax law, saying it would be good for businesses as well average Americans. Soon after President Donald Trump signed the law into place, the bank announced higher salaries for most of its retail bank employees, and said it would open branches in a handful of new markets.
“The global economy continues to do well, and we remain optimistic about the positive impact of tax reform in the U.S. as business sentiment remains upbeat, and consumers benefit from job and wage growth,” Dimon in a statement.
The Federal Reserve has been steadily raising interest rates for more than two years now, and banks have started benefiting from this change. Net interest income at JPMorgan was $13.3 billion, up 10 per cent from a year earlier.
JPMorgan’s investment bank also had a solid quarter, helped by much more volatile and active markets last quarter. Net income in the investment bank was $3.97 billion, up from $3.24 billion a year earlier.
JPMorgan’s quarterly revenue was $28.52 billion, up from $25.85 billion.
JPMorgan is one of a trio of big Wall Street banks who will report their quarterly results on Friday, along with Citigroup and Wells Fargo. Other big banks, including Goldman Sachs, Morgan Stanley and Bank of America, will report their results early next week.
Ken Sweet covers banks and the Consumer Financial Protection Bureau for The Associated Press. Follow him on Twitter at @kensweet.
Ken Sweet, The Associated Press