Investors looking for good news found it Friday as JPMorgan and Wells Fargo both reported double-digit profits on the finance sector's first day of third-quarter 2012 earnings releases.
JPMorgan Chase & Co. (JPM), often thought of as a bellwether of how both the economy and other banks are performing, saw quarterly profits rise 34% on income of $5.7 billion over the prior year's $4.3 billion, with earnings per share of $1.40 versus $1.02 a year ago. The results surprised analysts, who expected EPS of $1.24, and were due to strength in core lending, including mortgages, and commercial loans.
New home loans and refinancing totaled $47 billion at JPM in Q3, up 29% from last year. Mortgage unit earnings were 57% higher.
Wells Fargo (WFC) reported record quarterly net income of $4.9 billion, up 22% from last year's $4.1 billion, also thanks to increased lending, for a total of $21.2 billion in revenues. The record profits reflected 11 straight quarters of gains. EPS came in at $0.88 versus analysts' expectations of $0.87.
JPMorgan Chairman and Chief Executive Jamie Dimon (left) credited continued momentum in all of the bank's businesses, including a 9% rise in consumer and business banking.
"We believe the housing market has turned the corner," Dimon said in a statement. "In our mortgage banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default-related expense for a while longer."
Wells, which is the largest mortgage lender in the United States, continued to generate growth across its diversified set of businesses, said Chairman and CEO John Stumpf in a statement.
"In the third quarter, core loans grew by $11.9 billion and we saw continued strength in our mortgage and deposit businesses," Stumpf said. "We remained diligent in managing costs and continued to have strong underlying credit performance as our loss mitigation efforts and the low interest rate environment helped improve affordability for our customers."
