^{Source: Predictions based on analysts’ consensus from Visible Alpha}

JPMorgan Chase (JPM) Financial Results: Analysis

JPMorgan Chase & Co. (JPM), the largest U.S. bank by consolidated assets, beat analyst predictions on profit, revenue, and net interest margin for Q3 FY 2022 thanks to higher interest rates, although the result was partially offset by a net credit reserve build of more than $800 million and investment securities losses of almost $1 billion.

The bank’s earnings per share (EPS) declined 16.6% year-over-year (YOY) to $3.12, compared with a consensus estimate of $2.87. Revenue also outperformed, climbing by 10.4% YOY amid rising interest rates, with noninterest revenue actually declining.

JPMorgan’s better-than-expected results, released Oct. 14, underscore the benefits from interest rate hikes in recent months by the U.S. Federal Reserve. They helped boost net interest income even as the bank’s investment banking business slowed, reporting net investment securities losses for the quarter.

JPM Net Interest Margin

The lender’s net interest margin widened to 2.09%, up from 1.62% in the quarter from the same period a year ago, topping expectations of 1.99%. It’s a metric key to the banking industry that reflects the difference between interest lenders earn on assets and the interest they pay to depositors and other creditors. JPMorgan refers to net interest margin as “net yield on interest-earning assets.”

JPM Outlook and Stock Performance

While JPMorgan didn’t provide forward guidance. Chief Executive Officer Jamie Dimon has said that “significant headwinds” from inflation, higher interest rates, and geopolitical risks threaten the economy and, in turn, the bank’s business in the months to come.

JPMorgan shares, down 31% in the past year compared with a 16% drop in the S&P 500 Index, rose 3.4% as of 11:08 a.m. New York time.

JPMorgan’s next earnings report (for Q4 FY 2022) is expected to be released on Jan. 13, 2023.