Profits at JPMorgan Chase (JPM) 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, which fell 2% from the year-ago period, as its provisions for credit losses rose to $3.1 billion, up 125% from the year-ago period.
But JPMorgan’s investment banking operations performed better than analysts expected, as that revenue grew 29% from a year ago to $2.4 billion.
That should reinforce a conviction across Wall Street that dealmaking is on its way back after a two-year-long drought.
There were other positive signs from JPMorgan’s results. Total revenues were up and a key measure of lending profit known as net interest income also increased. The bank even upped its estimate of how much net interest income it expects to earn for the entire year by $1.5 billion.
“Broadly, I would say these earnings are consistent with the soft landing narrative, or arguably, what is increasingly a no-landing narrative,” the bank’s chief financial officer, Jeremy Barnum, told reporters.
The US consumer, Barnum added, remains “on strong footing” despite the rise in JPMorgan credit provisions, especially in the bank’s credit card business.
Its stock rose in pre-market trading by more than 1%.
The results kicked off a third quarter earnings season as lenders face questions about how a new Federal Reserve rate-cutting cycle will affect the biggest US banks.
JPMorgan CEO Jamie Dimon said his bank “reported strong underlying business and financial results in the third quarter” but he also highlighted concerns about geopolitics, saying “recent events show that conditions are treacherous and getting worse.”
He said “inflation is slowing and the U.S. economy remains resilient” but “several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”
“While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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