On Friday, JPMorgan kicked off big bank earnings, and in addition to being a bellwether of sorts for the industry, the numbers are likely to help set the tone for better or worse following two consecutive days of outsized losses on Wall Street.
After two straight quarters of impressive trading revenue, it looks like Q3 was a miss. Markets revenue was $4.4 billion, down 2%. Fixed income revenue was $2.8 billion, that’s down 10% YoY and looks like it missed estimates pretty handily. Equities revenue was $1.6 billion, that’s up 17% YoY.
The fixed income lapse is attributed to “mild weakness in Rates, Financing, Credit Trading and Securitized Products, as a result of compressed margins and tighter financing spreads in competitive markets”, while the robust equities markets performance is down to “strong strong client activity.”
Dimon calls the FICC results “mixed” but notes that that’s ok, because the stumble there was “offset by strong performance in Equities”.
The headline numbers beat, with Q3 adjusted revenue of $27.82 billion up 5% and easily topping estimates of $27.44 billion. Q3 EPS was $2.34. Net income was up 24% for the quarter to $8.4 billion.
Provisions for credit losses were below even the lowest estimate ($948 million versus $1.17 billion at the low end of the range). That $948 million figure represents a $1.5 billion decline from last year. That’s a testament to the strength of the consumer (I guess).
Dimon is pretty stoked about CCB. “We attracted record net new money this quarter, driving client investment assets up 14%, and we saw continued double-digit growth in card sales and merchant processing volume”, he said Friday, adding that “our customer satisfaction is at or near all-time highs, and we continue to grow deposits faster than the industry, even as the pace slows with rising rates.”
Generally speaking, this looks like a pretty run-of-the-mill set of results (other than the FICC fumble).
I imagine, given how much weight folks are inclined to put on what comes out of Dimon’s mouth these days, markets will try and take solace in the following, from the media packet:
The U.S. and the global economy continue to show strength, despite increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy.
Draw your own conclusions.
Full results
JPMQ3
My conclusion is that the FED should wait a while before hiking rates again. The world economy is slowing down, stock markets should be more worried about that instead of obsessing on the T-Bond yield. CPI was mild, not only in US, all over the world (ok, let’s not talk about Turkey and Venezuela)