JPMorgan Chase’s Third-Quarter Net Interest Income Exceeds Estimates

JPMorgan Chase has reported stronger-than-expected net interest income for the third quarter, leading to a rise in its shares during premarket trading on Friday. As the largest lender in the US by assets, the bank posted managed net interest income (NII) of $23.53 billion for the quarter, surpassing Bloomberg’s consensus estimate of $22.8 billion.

Net income for the period was $12.9 billion, exceeding expectations due to increased revenues and better cost management, although this figure reflects a 2% decline compared to a year ago.

Looking ahead, JPMorgan anticipates a slight decrease in NII to $22.9 billion in the current quarter, projecting an annual total of around $92.5 billion, down from $89.7 billion in the 2023 fiscal year. This outlook comes as the Federal Reserve may start a cycle of policy easing, potentially bringing an end to the elevated interest rates that have benefited large banks in recent years.

In September, JPMorgan President Daniel Pinto expressed skepticism about analysts’ projections for a $1.5 billion decrease in NII to $90 billion by 2025, suggesting that such estimates might be “not very reasonable,” especially with expectations for the Fed to reduce borrowing costs significantly. Although Pinto believes the figure could be lower, he refrained from providing a specific number.

The bank has previously warned investors that it might be “overearning” on its lending profits. Additionally, JPMorgan set aside $3.1 billion in provisions for potential loan losses, more than doubling the provisions from the same quarter last year.

Chief Executive Jamie Dimon emphasized that while inflation is “slowing” and the US economy appears “resilient,” the bank is cautious about several challenges, including “large fiscal deficits, infrastructure needs, restructuring of trade, and global remilitarization.” Dimon stated, “While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment.”