JPM (JPMorgan Chase) Earnings 3Q 2022

Jamie Dimon, CEO of JPMorgan Chase, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on annual oversight of the nation’s largest banks at the Hart Building on September 22, 2022.

Tom Williams | CQ-Roll Call, Inc. | Good pictures

JP Morgan Chase It posted third-quarter results on Friday that topped analysts’ estimates for profit and revenue, as the company generated better-than-expected interest income.

Here are the numbers:

  • Earnings: $3.12 a share, missing estimates of $2.88, according to Refinitiv.
  • Revenue: $33.49 billion, vs. $32.1 billion estimate.

The bank’s net interest income rose 34% to $17.6 billion in the quarter, driven by higher interest rates and expanding loans. That beat analysts’ expectations by more than $600 million. Shares of the New York-based bank rose 2.3% in premarket trading.

JP Morgan CEO Jamie Dimon While consumers and businesses remained financially strong, the economic picture was bleak:

“There are significant headwinds ahead of us immediately – stubbornly high inflation leading to higher global interest rates, the uncertain implications of quantitative tightening, the war in Ukraine, which amplifies all geopolitical risks, and the fragile state of oil supply and prices,” Dimon said in the statement. “We hope for the best, we are always vigilant and prepared for the worst outcome.”

Early signs of that headwind began to appear in the quarter. JPMorgan posted a $959 million loss on bonds in the quarter, reflecting a broader decline in financial assets during the quarter, which saw earnings per share decline by 24 cents.

JP Morgan, the largest U.S. bank by assets, is closely watching for clues about how banks are navigating the turbulent environment.

On the one hand, unemployment levels will be less, meaning consumers and businesses are having difficulty repaying loans. Rising interest rates mean banks’ core lending activity is more profitable. And volatility in financial markets is a boon for fixed income traders.

But investors have recently unloaded bank stocks, pushing JP Morgan and others to new 52-week lows this week, on concerns that the Federal Reserve could inadvertently trigger a recession. Investment banking and mortgage lending revenues have fallen sharply, and firms may issue writedowns amid a decline in financial assets.

On top of that, banks are expected to start increasing provisions for loan losses as the recession picks up; The six largest U.S. banks are expected to set aside a combined $4.5 billion in assets, according to analysts.

That’s consistent with Dimon’s cautious tone, which he said this week saw a recession hitting the U.S. in the next six to nine months.

Last month, JP Morgan Chairman Daniel Pinto warned Third-quarter investment banking revenue was headed for a 50% decline, due to IPO activity and a decline in debt and equity issuance. Helping offset that, trading revenue edged up 5% from a year ago on strong fixed income activity, he said.

As a result, investors should expect inconsistent trends in the quarter and a wider-than-usual range of outcomes across the six largest U.S. companies.

Shares of JPMorgan are down 31% this year through Thursday, worse than a 25% decline. KBW Bank Code.

Morgan Stanley, Wells Fargo and Citigroup Declare the results on Friday and so on Bank of America Monday and Goldman Sachs On Tuesday.

This story is developing. Check back for updates.

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