JPMorgan Chase (JPM) profits fell in the third quarter as it set aside more money to cover future loan losses, but its Wall Street operations beat expectations.
Net income was $12.9 billion, down 2% from the same period last year, as provisions for credit losses increased to $3.1 billion, up 125% from the same period last year.
But JPMorgan’s investment banking operations performed better than analysts expected, with revenues growing 29% from a year ago to $2.4 billion.
That would reinforce the conviction across Wall Street that dealmaking is on the way back after a two-year drought.
There were other positive signs from JP Morgan’s results. Total revenues rose, as did the key measure of lending profits known as net interest income. The bank even raised its estimate for how much net interest income it expects to earn for the full year by $1.5 billion.
“Overall, I would say that these earnings are consistent with the soft landing narrative, or arguably increasingly the no-land narrative,” Jeremy Barnum, the bank’s chief financial officer, told reporters.
Barnum added that the US consumer remains “on solid footing” despite higher credit allocations at JP Morgan, especially in the bank’s credit card business.
Its stock rose in pre-market trading by more than 1%.
The results kicked off third-quarter earnings season as lenders face questions about how a new Fed rate cutting cycle will impact the largest U.S. banks.
JP Morgan CEO Jamie Dimon said his bank “reported strong business and financial results in the third quarter” but also highlighted concerns about geopolitics, saying “recent events show that conditions are treacherous and getting worse.”
He said that “inflation is slowing and the US economy remains resilient” but “many critical issues remain, including large fiscal deficits, infrastructure needs, trade restructuring and the re-militarization of the world.”
“While we hope for the best, these events and the prevailing uncertainty highlight why we must prepare for any environment.”
David Hollerith is a senior reporter at Yahoo Finance covering banking, cryptocurrency, and other areas of finance.
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