New York [US], October 12: JPMorgan Chase shares jumped 4.44 percent on Friday after the bank reported third-quarter earnings that exceeded analysts' expectations for both profit and revenue, largely driven by stronger-than-expected interest income.
The company posted earnings of 4.37 U.S. dollars per share, higher than the 4.01 dollars forecasted, while revenue came in at 43.32 billion dollars, beating estimates of 41.63 billion dollars. Despite a 2 percent year-over-year decline in profit to 12.9 billion dollars, revenue grew by 6 percent. Net interest income (NII) rose 3 percent to 23.5 billion dollars, surpassing predictions, thanks to gains from securities investments and increased loan activity in its credit card business.
"These earnings are consistent with the soft-landing narrative" of modest U.S. economic growth, JPMorgan Chief Financial Officer Jeremy Barnum said. "In light of the positive momentum throughout the year, we're optimistic about our pipeline for mergers and acquisitions."
JPMorgan Chase CEO Jamie Dimon also praised the firm's strong quarterly performance in a statement, while also voicing concerns over the broader regulatory and geopolitical landscape.
Dimon highlighted the challenges posed by regulators' intensified efforts to require banks to hold more capital, warning that such measures could impact the financial system's flexibility. He also expressed growing alarm over rising geopolitical tensions, describing current global conditions as "treacherous and getting worse," reflecting the firm's cautious outlook amid an increasingly uncertain environment.
"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 Federal Reserve's recent decision to cut interest rates by 50 basis points to a range of 4.75 percent to 5.0 percent has initiated a new monetary easing cycle, a significant shift from the previous rate-hiking stance. JPMorgan Chase anticipates further rate cuts, with the Fed likely to ease by another 25 to 50 basis points at its next meeting in early November. This policy change is expected to provide a tailwind to the bank's net interest income in the short term, although the long-term impact remains to be seen.
The company raised its full-year 2024 NII guidance from the previous quarter, saying that NII would hit roughly 92.5 billion dollars this year, up from 91 billion dollars in the previous guidance. Annual expenses are projected at about 91.5 billion dollars, down from the earlier 92 billion dollars guidance.
Source: Xinhua