JPMorgan Chase has released information about earnings in the third quarter of the current year, which exceeded preliminary forecasts for the dynamic of the corresponding indicator.
The mentioned result of the largest financial institution in the United States is because the bank generated interest income, which is higher than expected.
JPMorgan Chase’s revenue for the third quarter of the current year was fixed at $43.32 billion. This figure is 6% higher than the result recorded for the same period in 2023. LSEG’s preliminary estimate stipulated that the mentioned indicator for July-September of the current year would be $41.63 billion.
The profit of the largest financial institution in the United States for the third quarter of 2024 amounted to $12.9 billion. In this case, a decrease of the indicator of 2% year-on-year was recorded.
Earnings per share for the last quarter were $4.37. LSEG’s preliminary estimate was that this indicator would be fixed at $4.01.
JPMorgan Chase’s net interest income for July-September of the current year amounted to $23.5 billion. This indicator increased by 3% compared to the result for the same period in 2023. It is worth noting that net interest income turned out to be higher than preliminary expectations. Estimate StreetAccount provided that the corresponding figure for the third quarter of the current year would be fixed at $22.73 billion. In this case, the result, which exceeded expectations, is associated with gains from the bank’s investments in securities and an increase in lending within its credit card business.
JPMorgan Chase chief executive officer Jamie Dimon, in his statement on the financial institution’s performance for the third quarter of 2024, drew attention to the fact that regulators are making large-scale efforts to force lenders to hold more capital. He also stated concern that the risks associated with the current state of affairs in the space of geopolitical relations are on an upward trajectory. According to him, the relevant conditions are treacherous and getting worse.
In the context of the current assessment of the geopolitical situation, Jamie Dimon drew attention to the expanding armed conflict in the Middle East. It is also worth noting separately that the escalation of tension observed nowadays, which has the form of expression, including in an open military confrontation, does not show signs of weakening or prospects for an early improvement in the situation.
Moreover, as part of the discussion about the current state of affairs in the geopolitical space, Jamie Dimon stated that people are suffering, and the outcome of the current configuration of reality in its socio-political dimension can have far-reaching consequences both for short-term economic results and for the course of history.
Last month, during a fireside chat held at Georgetown University, the head of the largest financial institution in the United States detailed his concerns about the present situation in the international area. According to him, the global order that was formed based on the results of the Second World War is currently unraveling against the background of active phases of military conflicts in different regions of the Earth. In an appropriate context, Jamie Dimon mentioned the growing tensions between the United States and China. He also drew attention to the risks of nuclear blackmail from capitals opposed to Washington. In his opinion, to cope with the current increase in tension in the geopolitical space, a really strong US leadership and Western world leaders are needed.
It is worth noting that Jamie Dimon also perceives the prospects of the economic system of the United States without excessive or even significant optimism. In his opinion, the fact that signs are currently being recorded that the Federal Reserve has provided the conditions for the implementation of the so-called soft landing scenario is not a guarantee that the further dynamics of the situation in the mentioned system will be positive. Jamie Dimon does not deny that inflation in the United States is currently on a downward trajectory. He also acknowledges that the US economic system remains resilient. However, at the same time, Jamie Dimon notes that some of the most important problematic factors still remain in force. In this case, it means a large fiscal deficit, infrastructure needs, trade restructuring, and the remilitarization of the world. According to Jamie Dimon, the current events and prevailing uncertainty demonstrate the necessity to be prepared for any environment.
Commenting on the upcoming regulatory changes that are expected to affect the US banking sector, the head of JPMorgan Chase said that the lender believes that it is possible to write rules that would strengthen the financial system and not provoke excessive consequences for the economy. According to him, now is an excellent time to take a step back and review the extensive set of existing rules that have come into force for a good reason. Jamie Dimon says that this algorithm of actions is necessary to understand the nature of the impact of the mentioned norms on the process of economic growth. The bank is currently awaiting new regulatory rules based on the Basel III endgame, the G-SIB surcharge, and any adjustments to the SCB or CCAR.
Returning to the financial institution’s earnings for the third quarter of the current year, it is worth noting that the corresponding results are largely due to the performance of its Wall Street unit. Investment banking fees for July-September 2024 were fixed at $2.27 billion. This indicator showed an increase of 31% compared to the result for the same period last year. The forecast of analysts interviewed by the media provided that investment banking fees for the third quarter of 2024 would be fixed at $2.02 billion.
The lender’s activities related to fixed-income trading generated $4.5 billion in revenue in July-September of the current year. This indicator showed no changes compared to the result for the same period in 2023. At the same time, a preliminary Street Account estimate provided that the bank’s mentioned activities for the third quarter of 2024 would generate revenue of $4.38 billion.
Trading equities for July-September of the current year brought the lender revenue, which amounted to $2.6 billion. This indicator increased by 27% compared to the result for the same period in 2023. A preliminary Street Account estimate provided that the mentioned activities of the bank would generate revenue of $2.41 billion for the third quarter of 2024.
The financial institution also raised full-year 2024 guidance for net interest income from the previous quarter. The bank expects that the corresponding figure will be fixed at around $92.5 billion. It is worth noting that the previous version of guidance for net interest income provided that the mentioned figure would amount to $91 billion.
The bank also projects that annual expenses will be fixed at around $91.5 billion. The previous version of guidance provided that this figure would amount to $92 billion.
It is worth noting that against the background of aggressive monetary policy, which the Fed began to implement in 2022 as part of countering rising inflation, JPMorgan Chase recorded record figures of net income. The lender benefited from high interest rates. After the central bank of the United States decided last month to begin easing monetary policy, implying a lowering of borrowing costs, conditions have changed. The margin of JPMorgan Chase, like other large financial institutions, may be squeezed. The realism of the corresponding perspective is because yields on interest-generating assets like loans fall faster than funding costs.
Last month, JPMorgan Chase dialed back expectations for 2025 net interest income and expenses. Analysts will want to get more detailed information about this lender’s expectations.
On Friday, October 11, the value of shares of the financial institution headed by Jamie Dimon rose by about 2% on the premarket trading. Since the beginning of the current year, the corresponding indicator has increased by 25%. It is worth noting that this dynamic of growth exceeded the 20% gain of the KBW Bank Index.
Last month, JPMorgan Chase president Daniel Pinto said that analysts’ estimates regarding the bank’s net interest income in 2025 were not very reasonable, given expectations for interest rates, sending the value of the financial institution’s shares showed a drop that turned out to be the highest in more than four years.
As we have reported earlier, JPMorgan Chase CEO Says Regulators Make It Difficult for Companies to Go Public.
