J.P. Morgan Chase on Tuesday posted profit and record revenue that exceeded expectations on the strength of consumer banking operations that helped the bank mitigate the impact of lower interest rates.
The bank said third-quarter profit rose 8% to $9.1 billion, or $2.68 a share, exceeding the $2.45 estimate of analysts surveyed by Refinitiv. Revenue also rose 8% to a record $30.1 billion, exceeding the $28.5 billion estimate. The bank cited growth in home loans, auto and credit cards. The stock rose 1.7 percent in early trading.
“The consumer remains healthy with growth in wages and spending, combined with strong balance sheets and low unemployment levels,” CEO Jamie Dimon said in the earnings release. “This is being offset by weakening business sentiment and capital expenditures mostly driven by increasingly complex geopolitical risks, including tensions in global trade.”
Banks have trailed the broader indexes this year on worries the Federal Reserve’s shift to easing rates will squeeze the industry’s profit margins. The Fed cut rates twice in the third quarter to avert a slowdown, and banks including J.P. Morgan and Wells Fargo warned last month that net interest income would be lower than earlier guidance.
Still, the bank posted $14.4 billion in the third quarter, exceeding the estimate of Morgan Stanley’s Betsy Graseck by almost $300 million, as J.P. Morgan grew its balance sheet, the firm said.
Here’s what Wall Street expected:
- Earnings: $2.45 per share, a 4.7% increase from a year earlier, according to Refinitiv.
- Revenue: $28.5 billion, a 2.4% increase from a year earlier.
- Net Interest Margin: 2.41%.
- Trading Revenue: Equities $1.58 billion, Fixed Income $3.19 billion, according to FactSet.
Also Tuesday, Goldman Sachs reported earnings that fell short of estimates.