JPMorgan Q3 Profit Down 17%, But Results Top Estimates

US investment bank JPMorgan Chase & Co. (JPM) reported Friday a profit for the third quarter that declined 17 percent from last year, hurt by higher provision for credit losses and net investment securities losses. However, both earnings per share and revenues for the quarter topped analysts’ expectations.

Net income for the quarter declined 17 percent to $9.74 billion or $3.12 per share from $11.69 billion or $3.74 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $2.88 per share for the quarter. Analysts’ estimates typically exclude special items.

The provision for credit losses was $1.54 billion, compared to last year’s net benefit of $1.53 billion, driven by net credit reserve build of $808 million and $727 million of net charge-offs.

Total net revenue on a reported basis was $32.72 billion. On a managed basis, net revenue was $33.49 billion, up 10 percent from $30.44 billion in the previous year. Wall Street expected revenues of $32.09 billion for the quarter.

Net interest income was $17.6 billion, up 34 percent, driven by higher rates.

Non-interest revenue was $15.9 billion, down 8 percent from last year, largely driven by lower Investment Banking fees, $959 million of net investment securities losses in Corporate and lower net production revenue in Home Lending, largely offset by higher CIB Markets revenue.

Noninterest expense was $19.18 billion, up 12 percent, driven by higher structural expense, primarily compensation, and continued investments in the business, including technology and marketing.

Consumer & Business Banking net revenue was $8.01 billion, up 30 percent, predominantly driven by higher deposit margins and growth in deposits.

Banking revenue decreased 18 percent to $4.03 billion, while markets & securities services revenue grew 5 percent to $7.85 billion from last year.

Looking ahead, Chairman and CEO Jamie Dimon said, “While we unfortunately still don’t know the ultimate effect of changes in capital requirements due to the completion of Basel III, through our earnings power and demonstrated ability to manage down risk-weighted assets, we expect to reach our current target CET1 ratio of 13%, which includes a 50 basis point buffer, in the first quarter of 2023.”

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