JPMorgan Chase & Co. reported a surprise gain in net interest income for the third quarter and raised its forecast for the key revenue source, even amid expectations that US interest rates will continue to fall.
Revenue from the bank’s Wall Street operations also defied analysts’ estimates, with investment-banking fees surging 31%, topping estimates for a 16% gain. Equity traders notched a 27% revenue increase.
Despite the strong showing, Chief Executive Officer Jamie Dimon offered a somewhat gloomy economic outlook.
“While inflation is slowing and the US economy remains resilient, several critical issues remain,” Dimon said in a statement Friday, citing fiscal deficits, infrastructure needs and remilitarization. On the geopolitical front, Dimon said “conditions are treacherous and getting worse,” and the outcome “could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history.”
After the Federal Reserve began embarked on its first rate cuts in more than four years last month, analysts began lowered their predictions for how much banks could expect to generate from their lending businesses. But JPMorgan said its net interest income increased 3% to $23.4 billion, beating expectations for a slight decline. The bank said NII for 2024 will come in at roughly $92.5 billion, compared with its previous forecast of about $91 billion.
Shares of New York-based JPMorgan, up 25% this year through Thursday, advanced 1.7% in early New York trading.
JPMorgan kicked off third-quarter earnings Friday alongside rival Wells Fargo & Co., with Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley slated for next week. Wells Fargo’s earnings topped estimates as investment-banking fees helped counter a dip in lending revenue.
Shareholders have already been on edge after a period of record hauls. Last month, JPMorgan President Daniel Pinto said analysts’ estimates for the bank’s 2025 NII were “not very reasonable” given rate expectations, sending the shares down the most in more than four years.
The firm’s results included a $3.11 billion provision for loan losses and $2.09 billion in net charge-offs, amounting to a roughly $1 billion reserve build. Most of the reserve build was tied to the consumer unit, primarily credit cards. Period-end card services loans grew 12% from a year ago.
Non-interest expenses came in at $22.6 billion, up 4% from a year ago but below the 5% gain analysts expected. JPMorgan said it now expects about $91.5 billion in adjusted expenses for the full year, down from the $92 billion guidance the firm gave in July.
This article was provided by Bloomberg News.
