Bank of America's financial report season opens, $JPMorgan (JPM.US)$ performing exceptionally well, with revenue and profits exceeding expectations.
JPMorgan's Q3 investment banking revenue increased significantly by 31% under the Fed's loose policy cycle, with net interest income unexpectedly growing by 3%, driving both profits and revenues to exceed expectations. However, CEO Jamie Dimon's view on the economic outlook is somewhat gloomy, believing that despite slowing inflation, the US economy remains resilient, but faces significant challenges such as a huge fiscal deficit, infrastructure needs, and trade restructuring. Most importantly, geopolitical risks are escalating continuously, which could have profound implications on short-term economic outcomes and historical processes.
On Friday, October 11th, JPMorgan Chase, the largest commercial bank in the United States, released its third-quarter financial report:
Revenue: $43.32 billion, above the expected $41.9 billion;
Net income: $12.9 billion, a 2% year-on-year decrease, but still higher than expected;
Net interest income: $23.5 billion, a 3% year-on-year growth;
Non-interest income: $19.8 billion, up 11% year-on-year.
Total assets under management (AUM): $3.9 trillion, up 23% year-on-year;
Investment banking revenue: $2.27 billion, up 31% year-on-year, exceeding expectations by 16%, ranking first in global investment banking revenue;
Market revenue: Fixed income market revenue of $4.5 billion, flat with last year, stock market revenue of $2.6 billion, up 27% year-on-year;
Although JPMorgan's Q3 performance has been strong, Dimon's view on the economic outlook is slightly pessimistic, as he stated in a declaration:
"Despite the slowing inflation, the US economy remains resilient, but there are still some key issues, including huge fiscal deficits, infrastructure needs, trade reshuffling, and global remilitarization. The geopolitical situation is extremely dangerous, worsening, potentially having far-reaching impacts on short-term economic outcomes and even historical processes."
Previously, JPMorgan's CEO Daniel Pinto warned investors that analysts' expectations for JPMorgan's 2025 net interest income were overly optimistic.
After the financial report was released, JPMorgan's stock price rose in pre-market trading.
Net interest income unexpectedly increased, with excellent performance in the investment banking business.
Wall Street analysts originally expected that the net interest income of major banks in the USA would decline in the third quarter, as banks gradually raised deposit rates before the Fed's rate cut in September, squeezing the space for net interest income.
However, JPMorgan Chase exceeded this expectation, with an unexpected year-on-year increase of 3% in Q3 net interest income, driving profits and revenues to exceed expectations.
At the same time, JPMorgan Chase's investment banking business performance was impressive - meeting Wall Street's expectations, but also surpassing them.
Analysts generally believe that compared to the same period last year, the investment banking business of major banks in the USA will grow in the third quarter, with expectations for new stock offerings and particularly strong bond underwriting business.
Over the past two years, the Federal Reserve has aggressively raised interest rates to suppress inflation, benefiting ordinary depositors. However, this has also made large companies cautious in major decisions such as acquiring small competitors or selling parts of their business, which are core businesses for investment banks. With the Fed beginning to reverse monetary policy, the investment banking business will experience a revival.
JPMorgan Chase's financial report this time confirms this point, with investment banking revenue of 2.27 billion USD, a significant year-on-year increase of 31%, ranking first in global investment banking revenue.
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