JP Morgan posts 17% drop in Q3 income as chief executive points to market headwinds

Net income for the three months to the end of September dropped to $9.7bn

JP Morgan Chase's revenue for the July-September period jumped 10 per cent on an annual basis to $33.5 billion. Reuters

JP Morgan Chase reported a 17 per cent drop in its third quarter net income on Friday, dragged down by a slide in investment banking revenue amid continued economic headwinds.

Net income for the three months to the end of September dropped to $9.7 billion, down from $11.7bn reported at the end of the same period in 2021, the New York-headquartered bank said in statement.

The drop in quarterly income was also driven by a “net credit reserve build of $808 million compared to a net reserve release of $2.1bn in the prior year”, the bank added.

The current quarter also included net investment securities losses of $959m resulting in a decrease of $729m after tax to net income.

Revenue for the July-September period jumped 10 per cent on an annual basis to $33.5bn, exceeding the $32.1bn estimate compiled by Refinitiv.

Revenue from investment banking, however slumped 43 per cent to $1.7bn.

Jamie Dimon, chairman and chief executive of JP Morgan Chase. AP

The bank delivered “solid performance across our businesses”, Jamie Dimon, chairman and chief executive of the of the bank, said.

“In the US, consumers continue to spend with solid balance sheets, job openings are plentiful and businesses remain healthy.

“However, 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,” Mr Dimon said.

JP Morgan’s shares rose nearly 2.7 per cent to $112.31 at 8.15pm UAE time on Friday. The company stock has lost more than 30 per cent of its value in the past 12 months.

Banking revenue for the reporting period dipped 18 per cent to $4bn in the third quarter, while the markets and securities services revenue reached $7.9bn, an annual increase of 5 per cent.

“While we are hoping for the best, we always remain vigilant and are prepared for bad outcomes so we can continue to serve customers even in the most challenging of times,” Mr Dimon said.

JP Morgan’s consumer and business banking division’s net revenue soared nearly 30 per cent to $8bn, driven by higher deposit margins and growth in deposits.

However, the home lending revenue dropped 34 per cent to $920m. It was mainly due to the “lower production revenue due to lower margins and volume and lower net interest income due to tighter loan spreads”.

“We continue to make all the investments that we need to grow our businesses and serve our customers,” Mr Dimon said.