<\/p>\n
JPMorgan Chase\u2019s third-quarter profit dropped as it set aside more money to cover potential loan defaults, while rising interest payments and investment banking revenue lifted its shares before the market open.<\/p>\n
Banks are building up stockpiles \u2013 which act as a safeguard when borrowers default on their loans \u2013 to typical levels as consumers deplete the savings they built up during the pandemic.<\/p>\n
JPMorgan set aside US$3.11 billion for likely credit losses, compared with US$1.38 billion a year ago, even though consumers\u2019 financial health has remained solid despite elevated interest rates and fears over unemployment.<\/p>\n
The investment bank raised its forecast for net interest income (NII) \u2013 the difference between it earns on loans and pays on deposits \u2013 to US$92.5 billion. It was expecting US$91 billion, while analysts polled by LSEG had forecast US$91.05 billion.<\/p>\n
Wall Street expects NII for the industry to shrink in the coming quarters after the Federal Reserve cut interest rates last month.<\/p>\n
The bank\u2019s CEO, Jamie Dimon, maintained his guarded tone on the economy.<\/p>\n
\u201cWe have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,\u201d Dimon said.<\/p>\n
\u201cThere is significant human suffering and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history.\u201d<\/p>\n
The bank\u2019s Wall Street operations were a bright spot as the prospect of monetary easing spurred a rally in equities in the third quarter and boosted dealmaking.<\/p>\n
Investment banking fees surged 31 per cent, double the management\u2019s guidance of 15 per cent last month. Strong performance in equities pushed trading revenue up 8 per cent, higher than the up to 2 per cent guidance the management had given last month.<\/p>\n
Overall, profit fell 2 per cent to US$12.90 billion for the three months ended Sep 30. Earnings per share of US$4.37, however, exceeded expectations of US$4.01, according to estimates compiled by LSEG.<\/p>\n
Shares rose about 2 per cent to US$217.23 in premarket trading, adding to their nearly 25 per cent gains this year.<\/p>\n
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