JP Morgan Chase & Co. kicked off the third-quarter earnings report season on a mixed note, reporting earnings that beat analysts expectations even as its net income fell.
The largest U.S. bank by assets reported net income of $9.7 billion, or $3.12 per diluted share, down 13% from the second quarter and down 17% from a year earlier. The year-over-year results beat the consensus estimate of analysts, who expected earnings of $2.98 per share, according to Zacks Investment Research Inc.
Third-quarter revenue increased 10% to $33.49 billion, due to higher interest rates caused by the Federal Reserve’s efforts to rein in inflation. Net interest income ballooned by 34% to $17.6 billion in the quarter, the bank said.
Net revenue from home lending was $920 million, down 8% from the second quarter and 34% from the third quarter of last year as the housing market slowed due to rising mortgage rates.
The bank said the decline was predominantly driven by “lower production revenue due to lower margins and volume, and lower net interest income due to tighter loan spreads." That was partially offset, it said, by higher net mortgage servicing revenue.
Noninterest revenue was $15.9 billion, down 8% due to lower investment banking fees, $959 million of net investment securities losses and lower net production revenue in home lending, the bank said.
CEO Jamie Dimon praised the bank’s performance in the quarter, noting that its Consumer & Community Banking segment once again ranked No. 1 in U.S. retail deposits, and that the bank was the fastest-growing among the Top 20 U.S. banks. He also noted that JPMorgan Chase is now No. 1 in the Top 3 largest markets, based on the most recent FDIC data.
The bank’s average deposits were up 9%, and debit and credit card sales were up 13%, he said.
Still, he cautioned that uncertainty about the economy remains an issue.
“In the U.S., consumers continue to spend with solid balance sheets, job openings are plentiful, and businesses remain healthy,” he said. “However, there are significant headwinds immediately in front of us – stubbornly high inflation leading to higher global interest rates; the uncertain impacts of quantitative tightening (by the Federal Reserve); the war in Ukraine, which is increasing all geopolitical risks; and the fragile state of oil supply and prices.”
“While we are hoping for the best,” he added, “we always remain vigilant and are prepared for bad outcomes so we can continue to serve customers even in the most challenging of times.”
