JPMorgan Chase on Thursday reported third quarter earnings well above Wall Street estimates, but share prices fell as investors focused on a big drop in trading revenue.
Here's how the bank did relative to a consensus estimate from analysts polled by Reuters:
- Earnings per share of $1.76 vs $1.65.
- Revenue of $26.2 billion vs $25.23 billion.
Fixed income trading revenue fell 27 percent to $3.16 billion, worse than the $3.25 billion projected by FactSet.
The shares closed 0.9 percent lower, still up 11 percent on the year.
"It's a good beat," said Jeffery Harte, principal of Sandler O'Neill. "The credit trends are favorable, the expenses are in line, the capital markets stuff didn't miss too badly."
Regarding the drop in fixed-income trading revenue, the bank noted "lower revenue across all products was driven by sustained low volatility and tighter credit spreads." Equities trading revenue fell 4 percent "reflecting lower revenue in derivatives predominantly offset by strength in Prime Services and Cash Equities." The decline came off a strong third quarter last year.
Overall trading revenue fell 21 percent in the third quarter.
This year's smooth financial markets have been tough on traders. This past September was the least volatile on record for the S&P 500, with an average daily range of 0.4 percent, according to LPL Financial.