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JPMorgan Chase today reported booming profits driven by a stellar performance at its investment banking division in London.
The New York giant racked up profits of $3.6 billion (£2.3 billion) in the third quarter of the year against just $527 million in the same period last year at the height of the financial crisis. Revenues jumped 79% to $28.8 billion resulting in record revenues for the year so far of $83.4 billion.
It was far better than analysts in the City and on Wall Street expected and shares rose more than 4% in early trading in New York today.
Chairman and chief executive Jamie Dimon hailed the performance of the investment banking arm where revenue was up 85% on a year ago at $7.5 billion. Profits more than doubled to $1.9 billion. The sharp rise was driven by its Europe, Middle East, and Africa operations which are headquartered in London, chiefly at London Wall in the City, where it employs 4000 staff.
Underwriting fees in London have soared this year as JPMorgan advised on a wave of fundraisings including cash calls by banking rival HSBC, property group Land Securities and mining firm Xstrata. Fixed income has also been particularly strong.
EMEA revenues rose from $2.2 billion in the second quarter of the year to $2.9 billion in the third quarter — in stark contrast to sliding revenues in the Americas and Asia Pacific.
It raised further questions over the shock ousting of Bill Winters, who was co-head of investment banking and in charge of EMEA in London. His exit prompted speculation that London was on the wane in the JPMorgan empire but Dimon and others in the high command have moved swiftly to reassure staff.
JPMorgan, considered one of the strongest US banks in an industry battered by the economic downturn, was the first large bank to report its third-quarter results.
Goldman Sachs and Citigroup follow suit tomorrow.
JPMorgan has benefited from the shrewd takeovers of Bear Stearns and Washington Mutual. The deals helped JP Morgan, which repaid $25 billion of US government rescue funds in June, to expand its investment banking and consumer business.
The success of the investment banking business so far this year has helped offset mounting losses on credit cards and other consumer loans as borrowers struggle to make repayments.
