JPMorgan Chase & Co beat forecasts for revenues and profits on Friday as global bond and currency markets roared back to life in the third quarter following Britain's vote to leave the European Union.
Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms boosted trading revenue by 21 percent for JPMorgan, the biggest U.S. bank by assets, prompting pretax profit to jump by one-third.
JPMorgan's aftertax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. Both revenues and profits topped analysts' estimates.
Earnings per share fell to $1.58 from $1.68 a year ago. Analysts, on average, expected $1.39, according to Thomson Reuters I/B/E/S.
JPMorgan is the first big U.S. bank to report third-quarter results and its performance gave Wall Street a shot in the arm.
The bank's shares were up 1.6 percent at $68.84 in premarket trading while markets-focused rivals, including Goldman Sachs, Morgan Stanley and Citi also rose.
Wells Fargo & Co and Citigroup Inc, the third and fourth biggest U.S. banks by assets, also reported results on Friday. Citi earnings per share and revenues topped estimates. Wells Fargo earnings beat expectations.
Bank of America Corp, the second biggest, will report on Monday.
In addition to a fillip from Brexit, banks got a boost from a rise in the London interbank offered rate, or Libor, a benchmark for more than $300 trillion worth of financial products worldwide.
Libor moved to a seven-year high during the third quarter as U.S. money market funds scaled back holdings in short-term bank debt in advance of new regulations.
JPMorgan's total revenue rose 8 percent to $25.51 billion, beating the average estimate of $23.99 billion.
With interest rates at record lows, the banking sector has relied on growing its loan book to boost income.
However, total provisions for bad loans rose 86.4 percent to $1.27 billion. JPMorgan posted higher provisions for losses as it added loans and recorded charge-offs for oil and gas loans.
Core loans in its commercial banking business grew 14 percent.
JPMorgan expects income from lending to be up modestly in the fourth quarter.
The Fed last raised rates in December, by 0.25 percentage points, after keeping them near zero for almost a decade. At the start of the year, further rate hikes were widely expected, but now Wall Street expects just one increase in December and possibly one more in 2017
JPMorgan's return on tangible common equity, a key performance measure, was 13 percent in the latest quarter, compared with the bank's longer-term target of about 15 percent.
(Writing by Carmel Crimmins; Editing by Ted Kerr and Jeffrey Benkoe)