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JPM kicks off 1Q with 10% dividend increase

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JPM kicks off 1Q with 10% dividend increase

JP Morgan Chase kicked of bank earnings seasons on a high note, reporting strong sales and earnings growth despite the drag of persistently low interest rates and ongoing legal expenses tied to government probes. JP Morgan, the nation’s biggest bank, reported net income for the first quarter of $5.9 billion, or $1.45 a share, up 12% over this time last year. The bank reported revenue of $24.8 billion for the three months ended in March, up $967 million compared with the prior year.635645571879854202-JPM-Dimon-proud

The results were boosted by a 9% increase in trading revenues to $5.67 billion, including a whopping 22% rise in revenues from stock trading. Fixed income trading revenue increased 5% to $4.1 billion — the bank’s first increase on bond trading since 2010. The company also posted record investment banking revenues with commercial banking clients, up 68% from last year. Commercial banking loans were also strong, resulting in period-end loan balances up 11% over last year, the company said.

The results beat Wall Street’s expectations for earnings of $1.39 a share on revenue of $24.5 billion, according to FactSet. The New York bank also said it plans to increase its quarterly dividend in the current quarter by 10% to $0.44 a share. Shares of the $229 billion bank recently traded up 1.8% to $63.22 a share. Despite the surprise earnings beat, analysts said big banks, including JP Morgan, continue facing a tough profit environment, including loan growth that remains weak, despite recent upticks.

JP Morgan’s earnings beat will likely be the highlight of this quarter of bank earnings, but only due to their surprise jump in trading revenues, said Paul Miller of FBR Capital Research. “They had very strong fixed income [trading], but we don’t know how long that’s going to last,” Miler said. “To get people excited, you need higher interest rates.” Legal expenses from government probes, which picked up in the wake of the banking bailouts, also continued to drag on earnings, including a charge for $487 million in the first quarter. The legal expense reduced aftertax earnings by $0.13 per share.

JP Morgan is facing a Justice Department probe into manipulation of foreign exchange markets. Last month, the bank forked over $50 million to the Justice Department for perjurious dealings in tens of thousands of mortgages in the aftermath of the mortgage crisis. In a conference call with reporters, JP Morgan CFO Marianne Lake said the bank hopes to reach an agreement with DOJ in the foreign exchange probe “over the coming weeks.”