JPMorgan Chase on Friday reported results that topped analysts’
estimates as the biggest US bank by assets took advantage of rising rates to
generate more interest income. The bank’s third-quarter profit fell 17% from
the year-ago period to $9.74 billion, or $3.12 per share, as the firm added to
reserves for bad loans by a net $808 million. Excluding a 24 cents per share
hit tied to losses on investment securities, the bank reported earnings of
$3.36 per share, significantly beating analysts’ forecasts.

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Revenue grew 10% to $33.49 billion in the reported quarter, thanks to
higher interest rates as the Federal Reserve fights inflation. Net interest
income jumped 34% to $17.6 billion in the period because of higher interest
rates and an expanding book of loans. That topped analysts’ estimates by more
than $600 million.

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Revenue from investment banking, one of the bank’s biggest businesses,
plunged 43% to $1.7 billion as a mix of high inflation and fears of the looming
recession forced buyers and sellers to hit pause on deals.

Shares of the New York-based bank rose 2.33% in the early hours of
trading. JPMorgan’s stock has declined 31% so far this year, underperforming
the broader S&P 500 index’s 23% drop in the same period.

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JPMorgan CEO Jamie Dimon said that while consumers and businesses were
financially strong in the quarter, the economic picture was darkening. “There
are significant headwinds immediately in front of us – stubbornly high
inflation leading to higher global interest rates, the uncertain impacts of
quantitative tightening, the war in Ukraine, which is increasing all
geopolitical risks, and the fragile state of oil supply and prices,” Dimon said
in the statement.

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“While we are hoping for the best, we always remain vigilant and are
prepared for bad outcomes,” he added.

Early signs of those headwinds started appearing in the third quarter.
JPMorgan recorded $959 million in losses on securities in the quarter,
reflecting the broad declines in financial assets in the quarter.

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JPMorgan, the biggest US bank by assets, is watched closely for hints on
how banks are navigating a confusing environment. Morgan Stanley reported
results below expectations on sharp declines in investment banking and
investment management revenue. Bank of America will report results on Monday
and Goldman Sachs on Tuesday.