Improved sales led to a bump in revenue for this company during the most-recent quarter.
Share buybacks and an increase in dividends also let it reward investors.
The stock trades at 11.6 times the company’s 2021 earnings forecast.
J.P. MORGAN CHASE & CO. (New York symbol JPM; www.jpmorganchase.com) lets investors tap the largest banking firm in the U.S., with total assets of $3.76 trillion as of September 30, 2021.
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The bank recently passed the U.S. Federal Reserve’s latest stress test, which measures how financial firms would cope with a jump in unemployment, falling stock prices and other unfavourable developments. The Fed has also relaxed some of the controls it placed on banks in March 2020 now that the COVID-19 pandemic is easing.
Morgan is now raising your quarterly dividend by 11.1%. Starting with the third quarter payment on October 31, 2021, investors will receive $1.00 a share instead of $0.90. The new annual rate of $4.00 yields 2.4%.
Including this latest increase, Morgan’s dividend has risen an average 15.8% annually over the past 5 years. Its TSI Dividend Sustainability Rating is Above Average.
The bank continues to take back the funds it set aside in 2020 to cover potential bad loans as a result of the COVID-19 lockdowns.
The bank is also buying back its shares. In the first half of 2021, it repurchased 74.2 million shares at a total cost of $11.2 billion. Morgan still has $18.8 billion remaining under its current buyback authorization.
In the three months ended September 30, 2021, due to those reversals, the bank recorded a net credit of $1.53 billion. A year earlier, those provisions totaled $611 million.
As a result, earnings jumped 23.8%, to $11.69 billion from $9.44 billion. Morgan spent $5.24 billion on share buybacks during the quarter. As a result, per-share earnings rose at a faster rate of 28.1%, to $3.74 from $2.92.
If you factor out unusual items, Morgan earned $3.03 a share. That topped the consensus estimate of $3.00.
Revenue gained 1.3%, to $29.65 billion from $29.26 billion. However, that missed the consensus forecast of $29.79 billion.
Demand for new loans from consumers, particularly home mortgages, continues to improve. That offset weaker demand from businesses, as well as the impact of lower interest rates.
Separately, Morgan is paying an undisclosed amount for OpenInvest. This private firm has developed software that helps institutional and individual investors select investments based on environmental, social, and governance (ESG) criteria. This technology will help Morgan profit as more of its clients direct their investments to companies with high ESG scores.
Morgan also continues to see strong fee revenue from advising corporate clients on mergers and acquisitions. However, revenue from securities trading fell 5% on lower trading volumes.
The bank expects loan demand will continue to recover, particularly as credit card spending rises during the holiday season. That should lift Morgan’s full-year earnings by 59.1% to $14.13 a share, and the stock trades at just 11.6 times that forecast.
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