Shares of the largest US bank rose 2% after the results, which are being closely watched to assess the real impact on corporate America of the Federal Reserve’s aggressive interest rate hikes to tamp down inflation.
Typically, rising interest rates are good for banks because they can charge consumers more, but the broader risk of an economic slowdown and higher cost of borrowing could cloud the economic outlook and hurt future earnings.
Chief executive Jamie Dimon said in a statement that American consumers continue to spend and businesses remain healthy.
However, he added there were “significant headwinds immediately in front of us”, noting stubbornly high inflation leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine and the fragile state of oil supply and prices.
“While we are hoping for the best, we always remain vigilant and are prepared for bad outcomes.”
For the quarter, JPMorgan’s profit fell to US$9.74 billion, or US$3.12 per share.
Revenue rose 10% to US$32.72 billion, helped by a 22% increase in revenue from fixed income trading.
The bank’s adjusted profit was US$3.36 per share, well above analysts’ average estimate of US$2.88, according to Refinitiv data.
Credit Suisse analyst Susan Roth Katzke said “simply put, JPMorgan delivered a solid set of results, from top to bottom”.
“At least equally as important is the evidence of preparedness to manage through whatever turn the macro takes.”
The bank’s net interest income excluding markets rose 51% to US$16.9 billion in the quarter, driven by higher rates.
For the fourth quarter, the bank expects the metric to rise to about US$19 billion.
It set asideUS $808 million in reserves, as the Fed’s interest rate hikes stoke fears of an economic downturn.
By comparison, in the same quarter last year, the bank had released US$2.1 billion of reserves.
Revenue from investment banking, one of the bank’s biggest businesses, slumped 43% toUS $1.7 billion as a mix of high inflation and fears of looming recession forced buyers and sellers to hit pause on deals.
The dearth of activity has led to a slump in banks’ fees from underwriting and advising M&A and initial public offerings, contrasting a record run last year.
JPMorgan’s stock has fallen 31% so far this year, underperforming the broader S&P 500 index’s 23% drop in the same period.