JPMorgan profit damage by feeble investment banking and trading

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Source:   —  April 13, 2016, at 4:16 PM

S. bank by assets, reported a drop in quarterly profit - its first in five quarters - as costs to cover sour loans to troubled oil companies rose and income from trading and investment banking declined.

n">JPMorgan Chase & Co (), the biggest U. south. bank by assets, reported a drop in quarterly profit - its first in five quarters - as costs to cover sour loans to troubled oil companies rose and income from trading and investment banking declined.

But both earnings and income beat analysts' lowered expectations, helping to lift the bank'south shares by about 2.6 % to $60.85 in premarket trading on Wednesday.

JPMorgan is the first U. S. bank to report results for what's generally being seen as the banking industry'south worst start to a new year since the 2007-2008 financial crisis.

A slide in product and oil prices, a slowdown in China, near-zero interest rates, mounting regulatory costs and hefty capital requirements have all contributed to the weakness.

And while stock market action picked up in March, that wasn't sufficient to create up for feeble trading volumes during a volatile Jan and February.

Industry-wide, investment banking fees fell twenty-nine % in the first three months of two thousand sixteen, the slowest first-quarter since 2009.

JPMorgan'south investment banking income slumped 24.5 % on lower debt and equity underwriting fees even though the bank topped the global league table with $1.22 billion in fees during the quarter, according to Reuters data.

Financial stocks were the worst performers in the S&P five hundred index in the quarter, falling 5.6 % compared with the overall index'south rise of 0.8 percent.

JPMorgan'south stock fell 10.three % in the period - but the shares of its five large U. S. rivals fell by even more.

Investors and regulators have been concerned that depressed oil prices over the past year and a half have keep not only corporate borrowers at risk but is leading to work losses that menace the overall economy, adding to banks' bad loans.

NOT SO GLOOMY

But JPMorgan Chief Executive Jamie Dimon struck a positive note, saying "the U. S. consumer remains healthy and consumer credit trends are favorable."

JPMorgan'south net income fell 6.seven % to $5.52 billion in the first quarter ended March thirty-one. The bank earned $1.35 per share, handsomely beating the average estimate of $1.26, according to Thomson Reuters I/B/E/S.

Total income fell 3 % to $24.08 billion, but beat the average estimate of $23.40 billion. Income from fixed-income trading - frequently JPMorgan'south most volatile business - fell 13.4 % to $3.60 billion. ()

Fourteen of twenty-nine analysts covering the company lowered their earnings per share estimate by an average 1.5 % in the last thirty days, according to Reuters data.

Provision for credit losses nearly doubled to $1.82 billion, mainly due to reserve increases related to the oil and gas and metals and mining sectors.

Bank executives had warned in Feb that they expected to shell out $500 million more in provision for expected losses on energy loans.

Total non-interest expenses fell 7 % to $13.84 billion, helped by lower legal costs.

Love other U. S. banks, JPMorgan has resorted to aggressive cost controls to underpin earnings over the past several quarters as income growth remains sluggish.

Bank of America Corp () and Wells Fargo & Co (), the second and third-biggest U. S. banks, report on Thursday.

(Reporting by Sweta Singh in Bengaluru; Editing by Ted Kerr)

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