NEW YORK -- JPMorgan Chase & Co., the biggest U.S. bank, swung to a third-quarter profit from a year earlier as a surprise gain in fixed-income trading helped drive up revenue.
Net income was $5.6 billion, or $1.36 a share, compared with a loss of $380 million, or 17 cents, a year earlier, the New York-based lender said Tuesday in a statement. Legal costs cut earnings by 26 cents a share, or $1 billion, more than some analysts predicted. The average estimate of 27 analysts surveyed by Bloomberg was for adjusted earnings of $1.39 per share, with forecasts ranging from $1.30 to $1.50.
Chief Executive Officer Jamie Dimon, 58, has been contending with climbing expenses as the bank bolsters regulatory compliance and computer security. Revenue beat analysts' estimates, helped by higher-than-expected fixed-income trading revenue.
"If you look at the printed number, it is showing a miss, but all businesses are doing relatively well," said Guy de Blonay, a London-based fund manager at Jupiter Asset Management Ltd., which owns JPMorgan shares. "For example, the investment bank is doing better."
Revenue in the quarter rose 5.4 percent to $25.2 billion, beating an average estimate of $24.4 billion from 10 analysts. Fixed-income trading revenue rose 2 percent to $3.5 billion, fueled by strength in currencies and emerging markets, beating the $3.2 billion estimate from David Konrad, Macquarie Group Ltd.'s head of U.S. bank research.
The earnings report was released online hours before the scheduled time. JPMorgan shares were little changed Tuesday, closing at $57.99, down from Monday's closing price of $58.16.
JPMorgan, the biggest fixed-income trading firm, is grappling with sluggish activity in that market caused by central bank intervention. While Chief Financial Officer Marianne Lake has said low client volume will probably continue through the middle of 2015, fixed-income trading may have gotten a boost as volatility increased in the final weeks of the quarter.
"Despite challenges, we have continued to deliver strong underlying performance, maintain our fortress balance sheet and liquidity, simplify the business and adapt to regulatory changes," Dimon said in the statement.
Last week, Dimon made his first public appearance since undergoing eight weeks of treatment for throat cancer, a condition he disclosed in July.
Dimon said in the Oct. 10 panel discussion that JPMorgan will probably double its $250 million annual cybersecurity budget within five years. The bank disclosed Oct. 2 that hackers had obtained contact information of 76 million households and 7 million small businesses, while adding that account numbers and passwords weren't compromised.
Citigroup, the third-largest U.S. bank, and Wells Fargo & Co., the biggest mortgage lender, also reported quarterly results Tuesday. Bank of America, Goldman Sachs and Morgan Stanley report later this week.
Citigroup Inc., based in New York, said it had earnings of $1.07 per share. Adjusted earnings were $1.15 per share.
The results topped Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $1.12 per share.
The U.S. bank posted revenue of $19.60 billion in the period, also exceeding Street forecasts. Analysts expected $19.02 billion, according to Zacks.
Citigroup said Tuesday that it will bow out of the retail banking business in 11 markets, part of an ongoing effort since the financial crisis to restructure and slim down.
Citi said the impact would primarily be smaller countries in Latin America: Costa Rica, El Salvador, Guatemala, Nicaragua, Panama and Peru. It will also exit consumer banking in Egypt, Japan, the Czech Republic, Hungary and Guam.
Citigroup shares have declined 4 percent since the beginning of the year, while the Standard & Poor's 500 index has increased slightly more than 1 percent. The stock has risen slightly more than 1 percent in the last 12 months.
Citigroup shares rose $1.57, or 3.2 percent, to close Tuesday at $51.47.
Wells Fargo & Co., the biggest U.S. home lender, posted a third-quarter profit that matched analysts' estimates as fees from mortgage banking fell and lending margins narrowed.
Net income rose 2.7 percent to $5.73 billion, or $1.02 a share, from $5.58 billion, or 99 cents, a year earlier, the San Francisco-based lender said Tuesday in a statement. That met the average estimate of 25 analysts surveyed by Bloomberg.
Chief Executive Officer John Stumpf, 61, faces slackening demand for mortgages as the housing market shifts away from a refinancing boom that propelled profits in previous years. With interest rates still near record lows, Wells Fargo's net interest margin, a measure of profitability, has declined to the lowest in at least two decades.
"Net interest margins will go up when interest rates rise, the question is how do you bridge the gap between now and then?" Jennifer Thompson, an analyst at Portales Partners LLC, said in an interview before results were announced. "It has to be loan growth."
Wells Fargo shares fell $1.37, or 2.7 percent, to close Tuesday at $48.83.
Information for this article was contributed by Hugh Son, Julia Verlaine, Jon Menon and Elizabeth Dexheimer of Bloomberg News and Ken Sweet of The Associated Press.
Business on 10/15/2014