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J.P. Morgan Chase & Co. said a record third quarter for its investment bank helped propel profit far above expectations.

The largest U.S. bank by assets reported a profit of $6.29 billion, or $1.58 a share. That compares with a profit of $6.8 billion, or $1.68 a share, a quarter when the bank benefited from a one-time $2.2 billion tax benefit. Analysts polled by Thomson Reuters had expected earnings of $1.39 a share.

Revenue rose 8.4% to $25.51 billion. Analysts had expected $24 billion.

Shares added 1.9% in premarket trading.

J.P. Morgan's trading revenue rose by one-third to $5.75 billion from $4.34 billion in the third quarter of 2015.

Costs decreased 5.9% to $14.46 billion from $15.37 billion a year earlier, an effort the bank continues to drill down on, though Chief Financial Officer Marianne Lake said earlier this year those drops would begin to taper off.

The bank recorded an unusual legal gain of $71 million during the third quarter after having to set aside $1.3 billion for legal expenses in the same period a year ago. In the second quarter, J.P. Morgan took a legal gain of $430 million that Ms. Lake had said was mostly "associated with favorable developments" but declined to specify further.

J.P. Morgan has paid out billions of dollars in settlements over the past several years. It is expected to settle with regulators this fall for at least $200 million over federal investigations into whether it tried to win business by hiring the sons and daughters of powerful people in Asia, The Wall Street Journal reported in July.

Return on equity, a measure of the J.P. Morgan's profitability, was 10% in the third quarter compared with 12% in the third quarter a year ago. J.P. Morgan has continued to face more forceful questions from analysts, investors and shareholders over the past year over whether it might be better for shareholders if the global bank broke itself up into smaller, more manageable units.

Since the beginning of 2016, the bank's shares are up 2.6% compared with a 3% decrease in the KBW Nasdaq index of bank stocks, after rising 5.5% in 2015.

Big-bank stocks had been hit hard in the first half of the year as jitters about a China slowdown and oil-company defaults pressured the outlook for earnings. But large U.S. banks have fared much better than their European counterparts, and trading around the U.K. Brexit vote in June provided a burst of activity that has generally helped results more recently.

J.P. Morgan this quarter is kicking off bank earnings season with Citigroup Inc. and Wells Fargo & Co., both of which also report earnings Friday morning. Due to their large international presence, J.P. Morgan and Citigroup will be watched to gauge how the situation with Europe and Brexit will play out in the markets, the economy and with the banks' own plans for staffing in the region/

Write to Emily Glazer at emily.glazer@wsj.com and Peter Rudegeair at Peter.Rudegeair@wsj.com

(END) Dow Jones Newswires

October 14, 2016 07:25 ET (11:25 GMT)

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