Profits rose, but expectations were higher
The bank posted a net profit of $15.3 billion, representing a 6% year-over-year increase. Reported revenue rose 8% to $50.2 billion, and earnings per share increased by 10%. When evaluating the results, it is therefore important to distinguish between year-over-year growth and a comparison with current market estimates.
The results were weighed down by a pre-tax loss on investment securities of $658 million, which reduced earnings per share by $0.18. Excluding this item, the bank reports earnings of $5.75 per share. The difference between reported and adjusted earnings explains part of the weaker quarter and helps provide a more accurate assessment of the bank’s business performance.2
Equity markets boosted revenue, while bond markets lagged
Revenue for the Financial Markets division rose 15% year-over-year to $10.3 billion. Equity trading and related services generated approximately $5 billion, representing a 49% increase. However, the division focused on fixed income, currency, and commodity markets saw revenue decline by 4% to $5.4 billion. The overall improvement was thus accompanied by significant disparities among individual business lines.
Fees from the investment banking division reached $3 billion, up 14% year-over-year. However, they fell by 8% compared to the second quarter. These revenues come from advisory services for corporate transactions and from organizing equity and debt offerings. This slowdown is particularly significant for investors, as it suggests a weaker pace of fee generation over the course of the year.3
Consumer and wealth management driven growth
The Consumer and Small Business Services division increased revenue by 9% to $21.2 billion and net income by 13% to $5.7 billion. The volume of debit and credit card payments rose by 10% to $539.5 billion. The consumer division’s results thus helped offset weaker revenue from the trading segment.3
Asset and wealth management also performed well, with revenue rising 14% to $6.9 billion. Assets under management reached $5.2 trillion, up 13% year-over-year. Both new client funds and higher financial market valuations contributed to this growth. This trend boosted asset management fees and expanded the bank’s revenue streams.
Costs are rising faster than revenue
JPMorgan’s operating expenses rose 12% to $27.3 billion, growing faster than its revenue. The bank spent more on employee compensation, technology, and marketing, with part of the spending related to increased trading activity. For shareholders, it will be important to see whether these investments generate sufficient revenue and profitability growth in the coming quarters.4
Credit risk costs totaled $2.7 billion, compared with $3.4 billion a year ago. They included net write-offs of non-performing loans totaling $2.2 billion and an increase in provisions of $539 million. The year-over-year decline in these costs helped the bottom line, but the creation of additional provisions indicates that the bank continues to anticipate potential losses on a portion of its loan portfolio.2 [1]
What the market will be watching in the coming quarters
JPMorgan expects net interest income of approximately $106.2 billion for the full year 2026, of which $97.2 billion excludes the financial markets division. Net interest income represents the difference between the interest the bank earns and the interest it pays. At the same time, it anticipates adjusted full-year expenses of $108.6 billion, which do not include legal expenses. Higher revenues are therefore accompanied by a higher spending plan.4 [2]
The bank’s preliminary scenario for 2027 projects net interest income, excluding the financial markets division, of approximately $107 billion. Chief Financial Officer Jeremy Barnum also noted that there are still many corporate transactions in the pipeline and that he expects them to be postponed rather than canceled. Future developments will depend on whether this interest translates into actual fees and whether loan growth supports the expected interest income.1 [3]
[1,2,3] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted, and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.
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[1] https://jpmorganchaseco.gcs-web.com/static-files/71d42762-a4d9-435b-9486-b7327e378dca
[3] https://jpmorganchaseco.gcs-web.com/static-files/87d753bc-5b07-4a5e-a0fd-0c1504b1abb1