JPMorgan Proves Wall Street Still Rules

Tim Catts

posted: 42 DAYS 20 HOURS AGO

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Just a year ago, Wall Street's survival seemed far from assured. Titans of finance like Merrill Lynch and Lehman Brothers had disappeared, and even the strongest of those left standing, including JPMorgan Chase (JPM) and Goldman Sachs (GS), took billions of dollars in government assistance to bolster their balance sheets. The era of wild -- and lucrative -- financial risk-taking was supposed to be over.

The Wall Street Journal even dubbed the final days before Lehman's collapse "the weekend that Wall Street died." Now, of course, it seems that rumors of its demise have been greatly exaggerated -- and the proof is in the profits. JPMorgan's $3.6 billion in net income last quarter, powered by investment banking revenue that rose 85 percent from a year ago, shows that the biggest banks can still make tons of money.

How much money? JPMorgan raked in $28.8 billion in revenue from July to September, the second consecutive quarter it posted record income. That helped it beat analysts' profit estimates by a whopping 31 cents a share. Last quarter it beat expectations by "just" 13 cents.

JPMorgan made more money underwriting debt and equity issues, but the real boost came from its fixed-income trading operation. All told, investment banking revenue fell short of the record levels it reached earlier this year, but it's still the biggest factor pushing profits at the company higher.

2009-10-14 14:12:02