JPMorgan Chase shares pop 5% after topping estimates on better-than-expected interest income

JPMorgan Chase posted third-quarter results that topped estimates for profit and revenue as the company generated more interest income than expected.

Here’s what the company reported:

• Earnings: $4.37 a share vs. $4.01 a share LSEG estimate
• Revenue: $43.32 billion, vs. $41.63 billion estimate

JPMorgan said profit fell 2% from a year earlier to $12.9 billion, while revenue climbed 6% to $43.32 billion. Net interest income rose 3% to $23.5 billion, exceeding the $22.73 billion StreetAccount estimate, on gains from investments in securities and loan growth in its credit card business.

CEO Jamie Dimon touted the firm’s quarterly results in a statement, while also addressing regulators’ sweeping efforts to force banks to hold more capital and expressing concern about rising geopolitical risks, saying that conditions are “treacherous and getting worse.”

“We believe rules can be written that promote a strong financial system without causing undue consequences for the economy,” Dimon said, addressing the pending regulatory changes. “Now is an excellent time to step back and review the extensive set of existing rules – which were put in place for a good reason – to understand their impact on economic growth” and the health of markets, he said.

The bank’s results were also helped by its Wall Street division. Investment banking fees climbed 31% to $2.27 billion in the quarter, exceeding the $2.02 billion estimate.

Fixed income trading generated $4.5 billion in revenue, unchanged from a year earlier but topping the $4.38 billion StreetAccount estimate. Equities trading jumped 27% to $2.6 billion, edging out the $2.41 billion estimate, according to StreetAccount.

The company also raised its full-year 2024 guidance for net interest income from the previous quarter, saying that NII would hit roughly $92.5 billion this year, up from the previous $91 billion guidance. Annual expenses are projected at about $91.5 billion, down from the earlier $92 billion guidance.

Shares rose 5% in midday trading.

JPMorgan’s provision for credit losses in the quarter was $3.1 billion, worse than the $2.91 billion estimate, as the company had $2.1 billion in charge-offs and built reserves for future losses by $1 billion.

Consumers are “fine and on strong footing” and the increase in reserves was because the bank is growing its book of credit card loans, not because the consumer is weakening, CFO Jeremy Barnum told reporters Friday.

The biggest American bank has thrived in a rising rate environment, posting record net income figures since the Fed started hiking rates in 2022.

Now, with the Fed cutting rates, there are questions as to how JPMorgan will navigate the change. Like other big banks, its margins may be squeezed as yields on interest-generating assets like loans fall faster than its funding costs.

Last month, JPMorgan dialed back expectations for 2025 net interest income and expenses. On Friday, Barnum reiterated the bank’s view that NII was headed lower before rebounding “in the future.”

The third-quarter outperformance in NII was “a bit of a blip” that was the result of “intersecting trends that happen to net out” to an increase, not a sustainable trend, he said.

Shares of JPMorgan have climbed about 25% this year before Friday, exceeding the 20% gain of the KBW Bank Index.

Wells Fargo also released quarterly results Friday, while Bank of America, Goldman Sachs, Citigroup and Morgan Stanley report next week.