JPMorgan posts surprise NII gain, raises key revenue view

JPMorgan Chase reported a surprise gain in net interest income for the third quarter and raised its forecast for the key revenue source, even amid expectations that U.S. interest rates will continue to fall.

Revenue from the bank's Wall Street operations also defied analysts' estimates, with investment-banking fees surging 31%, topping estimates for a 16% gain. Equity traders notched a 27% revenue increase.

Despite the strong showing, Chief Executive Officer Jamie Dimon offered a somewhat gloomy economic outlook.

"While inflation is slowing and the U.S. economy remains resilient, several critical issues remain," Dimon said in a statement Friday, citing fiscal deficits, infrastructure needs and remilitarization. On the geopolitical front, Dimon said "conditions are treacherous and getting worse," and the outcome "could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history."

READ MORE: JPMorgan wealth unit sees slight increase in profits as overall profits rise

Shares of New York-based JPMorgan jumped 3.6% to $220.45 at 9:42 a.m. in New York. They're up 29% this year.

After the Federal Reserve began embarking on its first rate cuts in more than four years last month, analysts began lowering their predictions for how much banks could expect to generate from their lending businesses. But JPMorgan said its net interest income increased 3% to $23.4 billion, beating expectations for a slight decline. The bank said NII for 2024 will come in at roughly $92.5 billion, compared with its previous forecast of about $91 billion.

Still, Dimon warned on a conference call to discuss results with analysts that the 2025 NII haul will come in below analysts' estimates, while also taking aim at a series of questions on the topic.

"Next time I should give the damn number," Dimon said. "We spend too much time on this irrelevancy so you get a model."

JPMorgan kicked off third-quarter earnings Friday alongside rival Wells Fargo, with Bank of America, Citigroup, Goldman Sachs and Morgan Stanley slated for next week. Wells Fargo's earnings topped estimates as investment-banking fees helped counter a dip in lending revenue.

READ MORE: JPMorgan's wealth profits fall 26% on high compensation expenses

Pinto's warning

Shareholders have already been on edge after a period of record hauls. Last month, JPMorgan President Daniel Pinto said analysts' estimates for the bank's 2025 NII were "not very reasonable" given rate expectations, sending the shares down the most in more than four years.

The firm's results included a $3.11 billion provision for loan losses and $2.09 billion in net charge-offs, amounting to a roughly $1 billion reserve build. Most of the reserve build was tied to the consumer unit, primarily credit cards. Period-end card services loans grew 12% from a year ago.

Non-interest expenses came in at $22.6 billion, up 4% from a year ago but below the 5% gain analysts expected. JPMorgan said it now expects about $91.5 billion in adjusted expenses for the full year, down from the $92 billion guidance the firm gave in July.