JPMorgan Beats Q3 Expectations, Raises Net Interest Income Guidance

JPMorgan Chase (NYSE) saw a 1.6% rise in its stock during premarket trading on Friday after exceeding consensus expectations for Q3 earnings and raising its net interest income forecast for the year.

The bank's net interest income for Q3 surpassed Wall Street projections, although it also reported higher-than-expected provisions for credit losses. JPMorgan now anticipates 2024 net interest income, excluding markets, to reach approximately $91.5 billion, slightly up from the $91 billion guidance provided in July and above the $90.8 billion Visible Alpha consensus.

The 2024 adjusted expense guidance has been revised to around $91.5 billion, contingent on market conditions, compared to the previously forecasted $92 billion. The net charge-off rate for card services remains steady at approximately 3.4%, as previously guided.

The bank reported Q3 GAAP earnings per share (EPS) of $4.37, surpassing the analyst consensus of $3.98. However, EPS decreased from $6.12 in Q2 but increased slightly from $4.33 in Q3 of 2023. Adjusted revenue for Q3 stood at $43.3 billion, down from $51.0 billion in the prior quarter but higher than $40.7 billion a year ago.

Chairman and CEO Jamie Dimon highlighted the 31% growth in investment banking fees within the Commercial & Investment Bank (CIB) segment, along with an 8% rise in markets revenue. Additionally, payments fees experienced double-digit growth, driven by organic expansion through ongoing investments.

JPMorgan's provision for credit losses in Q3 reached $3.11 billion, higher than the Visible Alpha consensus of $3.04 billion, up from $3.05 billion in Q2 and significantly higher than the $1.38 billion recorded in Q3 2023.

Net interest income for the quarter amounted to $23.4 billion, exceeding the $22.7 billion Visible Alpha consensus and up from $22.7 billion in both Q2 and the year-ago period.

As of September 30, 2024, JPMorgan's total loans increased to $1.34 trillion from $1.32 trillion at the end of Q2. Deposits also grew, reaching $2.43 trillion compared to $2.40 trillion at the close of the previous quarter.

The bank's noninterest expenses for Q3 totaled $22.6 billion, down from $23.7 billion in Q2 but up from $21.8 billion in the same period last year.

Despite a 2% year-over-year drop in net income, JPMorgan's Q3 performance demonstrated strong growth in non-interest income and net interest income, benefiting from elevated interest rates. However, analysts pointed out that the sharp rise in provisions for credit losses—up from $1.31 billion a year ago to $3.1 billion—could indicate concerns about potential macroeconomic and geopolitical challenges that could affect future earnings growth.

By segment:

Consumer & Community Banking revenue stood at $17.8 billion, up 1% quarter-over-quarter (Q/Q) but down 3% year-over-year (Y/Y), with net income at $4.05 billion, representing a 4% drop Q/Q and a 31% decline Y/Y. The provision for credit losses increased by 6% Q/Q and 93% Y/Y to $2.80 billion.

Commercial & Investment Bank revenue came in at $17.0 billion, down 5% Q/Q but up 8% Y/Y, while net income fell 3% Q/Q but rose 13% Y/Y to $5.69 billion.

Investment Banking revenue surged 29% Y/Y to $2.4 billion, while Markets & Securities Services revenue increased by 8% from Q3 last year, reaching $8.37 billion. Fixed Income Markets revenue remained flat at $4.5 billion, but Equity Markets revenue jumped 27% to $2.6 billion.

Asset & Wealth Management reported $5.44 billion in revenue, up 4% Q/Q and 9% Y/Y, with net income of $1.35 billion, an increase of 7% Q/Q but a 5% decline Y/Y.