JPMorgan Shares Dropped as Banking Giant Posted Underwhelming Growth in Q3

JPMorgan Chase (JPM) yesterday posted a neutral-to-good quarter and outlook propelled by some optimism for the economy and the financials sector as a whole. These results included a $2.1 billion net credit reserve release.

Revenue of $30.4 billion was up $500 million or 2% YoY (not bad, but could be better). Net interest income was up 1% with balance sheet growth and higher rates primarily offset by mix and lower CIB Markets NII. Meanwhile, net interest revenue was up 3% driven by solid fee generation across investment banking and asset management divisions largely offset by net securities losses in corporate versus gains in the prior year and lower revenue in home lending.

Q3 net interest income of $13.2 billion only marginally exceeded the consensus estimate of $13.1 billion, while having increased just 1% YoY, driven by balance sheet growth and slightly higher loan rates.

Investment banking and trading came in better than expected, while card operation fees came in weaker, hurt by promotional expenses. The good news is that the card operations’ net interest income was up 9% QoQ.

JPMorgan Chase Financial Company LLC, part of JPMorgan Chase, said it is going to redeem all of its outstanding callable fixed-rate notes due April 26, 2028 at a price equal to the principal amount being redeemed plus any accrued and unpaid interest.

JPMorgan Chase decided to stick to its previous July 2021 net interest income guidance at ~$52.5 billion, but its market situation dependence was emphasized once again. JPM sees year-adjusted expense to the tune of $71 billion, also market dependent and unchanged from prior guidance.

Shares of JPM yesterday dropped 2.64% on series of analysts’ downgrades but moved higher 0.36% in today’s premarket. Such a muted first reaction casts a shadow over the iffy outcome of these quarterly earnings releases.