JPMorgan Chase CEO Jamie Dimon remains cautious about the economy despite the bank’s latest performance figures. In the third quarter, the bank reported a decline in profit, attributing this to increased provisions for potential loan defaults that offset gains in their investment banking sector.
The bank set aside $3.11 billion as a credit loss reserve, compared to $1.38 billion the same quarter last year. As a result, JPMorgan’s profits dropped by 2% year-over-year to $12.9 billion from $13.15 billion, while revenue grew by 6% to $43.32 billion. The bank’s net interest income (NII) increased by 3% to $23.5 billion, surpassing StreetAccount’s expectations of $22.73 billion, driven by gains in securities investments and growth in credit card loan activity.
As consumers draw down the savings they accumulated during the pandemic, banks are moving to increase their cash reserves to typical levels to safeguard against potential borrower defaults.
Despite the U.S. stock market reaching record highs and the Federal Reserve entering a long-anticipated rate-cutting cycle, Dimon maintains a cautious outlook. He stated, “For some time now, we have been closely monitoring geopolitical developments; recent events indicate a dangerous situation that is worsening.” He added, “Human suffering is at a massive scale, and these scenarios could have profound effects on not just short-term economic outcomes but also the historical trajectory.”
In his earnings report statement, Dimon praised the bank’s third-quarter results while addressing the regulatory push for banks to hold more capital. When discussing upcoming regulatory changes, he remarked, “We believe it’s possible to create rules that promote a strong financial system without imposing undue consequences on the economy.”
He emphasized that “now is a great time to take a step back and review a broad set of existing rules; there are good reasons for the establishment of these rules, so we can understand their impact on economic growth and market health.”
The bank’s Wall Street operations shone brightly in the third quarter, fueled by the Federal Reserve’s dovish monetary policy outlook, which spurred a stock market rally. Investment banking revenue surged by 29% to $2.4 billion, exceeding management’s earlier projection of 15% growth.
Fixed income trading generated $4.5 billion in revenue, consistent with the previous year and higher than StreetAccount’s expectations of $4.38 billion. Equity trading volumes climbed 27% to $2.6 billion, surpassing forecasts of $2.41 billion.
Furthermore, the company raised its forecast for full-year NII in 2024 to approximately $92.5 billion, up from the prior estimate of $91 billion. Annual expenses are now expected to be around $91.5 billion, slightly down from the initial forecast of $92 billion.
