JPMorgan and Wells Fargo Post Profits in Q3, Originations Improve
By: Tory Barringer
Increased mortgage-related revenue pushed both Wells Fargo and JPMorgan Chase to record quarterly profits in 3Q 2012, the banks reported.
JPMorgan posted a record net income of $5.7 billion, with net revenue at $24.9 billion.
The bank saw growth in mortgage originations, reporting $47 billion, a 29 percent increase from the prior year. Year-to-date, JPMorgan reported originating 664,000 mortgages.
Meanwhile, mortgage loan application volumes were $73.2 billion, up 26 percent year-over-year and 9 percent quarter-to-quarter.
JPMorgan chairman and CEO Jamie Dimon said the increase in mortgage revenue stems from overall improvements in the housing market.
“Importantly, we believe the housing market has turned the corner. 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,” Dimon said in a statement.
While mortgage performance did improve, Dimon noted that the level of charge-offs remains elevated and said the bank expects to see high default-related expenses “for a while longer.”
Wells Fargo reported record net income of $4.9 billion for the quarter, up approximately $800 million from 3Q 2011.
The bank posted $139 billion in originations (up from $131 billion in the previous quarter), while applications fell to $188 billion (from $208 billion before). The application pipeline also dropped a bit, posting $97 billion as of quarter end.
While both banks saw record profits in the third quarter, they also both saw drops in their net interest income, owing largely to the low-rate environment. JPMorgan reported drops in net interest income in most categories and overall, and Wells Fargo’s net interest margin deflated from 3.91 percent in the second quarter to 3.66 percent in the third.
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