TLDR
- JPMorgan Chase reported Q3 earnings of $5.07 per share, beating estimates of $4.84 and up 16% year-over-year
- Revenue reached $46.4 billion, exceeding the $45.2 billion estimate and growing 9% from last year
- The stock fell about 4% on Tuesday despite the earnings beat due to U.S.-China trade tensions
- CEO Jamie Dimon warned of heightened uncertainty from geopolitical conditions and potential sticky inflation
- The bank raised its full-year interest income guidance but also increased expense projections
JPMorgan Chase kicked off earnings season Tuesday with numbers that beat Wall Street expectations. But you wouldn’t know it by looking at the stock price.
The nation’s largest bank reported earnings of $5.07 per share for the third quarter. That topped analyst estimates of $4.84 per share and marked a 16% increase from the same period last year.
Revenue came in at $46.4 billion. The figure beat expectations of $45.2 billion and represented 9% growth year-over-year.
Net income rose 12% to $14.4 billion. All three major metrics showed double-digit percentage gains compared to the prior year.
Despite these results, JPMorgan Chase stock dropped about 4% on Tuesday. The broader market took a beating as well, with the Dow Jones falling 400 points at the open.
The culprit? Renewed trade tensions between the U.S. and China spooked investors across the board.
CEO Jamie Dimon struck a cautious tone in his statement. He acknowledged the U.S. economy has remained resilient but pointed to multiple concerns on the horizon.
“There continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation,” Dimon said. The warning seemed to resonate with investors who were already nervous about the macro environment.
Mixed Signals in the Outlook
The bank’s guidance painted a picture that wasn’t entirely clear-cut. JPMorgan Chase raised its forecast for net interest income to $95.8 billion from $95.5 billion.
But the bank also lifted its expense guidance. Full-year adjusted expenses are now expected to hit $95.9 billion, up from the previous $95.5 billion estimate.
There was some good news on credit quality. The bank lowered its net charge-off ratio to 3.3% from 3.6%, which suggests fewer bad debts going forward.
JPMorgan Chase also set aside 9% less in provisions for credit losses. This move indicates the bank expects lower losses ahead, which could be a positive sign for credit quality.
Business Segment Performance
Consumer Banking brought in $19.5 billion in revenue, up 9% from last year. Net income in this division jumped 24% to $5.0 billion.
Commercial and Investment Banking generated $19.9 billion in revenue, a 17% increase. Net income rose 21% to $6.9 billion in this segment.
Asset and Wealth Management posted revenue of $6.1 billion, up 12%. Net income grew 23% to $1.66 billion.
All three major business lines showed solid growth. The Banking & Wealth Management segment got a boost from higher deposit margins, which helped drive the 9% revenue increase in that area.
The stock trades at a P/E ratio of 15. Analysts have set a median price target of $333 per share, suggesting potential upside of about 12% from current levels.
JPMorgan Chase shares are up 23% year-to-date. Over the past 12 months, the stock has gained about 38%.
Wall Street analysts maintain a Moderate Buy rating on the stock. The consensus is based on 13 Buy ratings and five Hold ratings issued over the past three months.
