JPMorgan Chase Shares Surge 5% After Q3 Profit Beat

JPMorgan Chase (JPM.N) saw shares rise nearly 5% following a strong Q3 profit, driven by investment banking gains and higher interest payments.

JPMorgan Chase (JPM.N) experienced a notable surge in its stock price, climbing nearly 5% on Friday, following a third-quarter profit that exceeded analysts' expectations. This impressive performance was primarily driven by robust gains in investment banking and an uptick in interest payments. The anticipation of further monetary easing by the Federal Reserve catalyzed an equities rally throughout the third quarter, encouraging corporations to issue both debt and equity instruments.

The improving economic sentiment significantly bolstered earnings for JPMorgan, the largest lender in the United States, as well as its competitor, Wells Fargo (WFC.N), which also outperformed profit forecasts. As JPMorgan's stock hovered around $223, it was poised for its most substantial daily percentage increase in a year and a half. The bank's investment-banking fees soared by an astonishing 31%, effectively doubling the guidance of 15% provided just a month prior. Additionally, equities trading revenue rose by 8%, surpassing an earlier forecast of a mere 2%.

Net interest income—the differential between the interest earned on loans and the interest paid on deposits—grew by 3% in the quarter. In light of this performance, JPMorgan revised its annual net interest income forecast upward to $92.5 billion, an increase from the previous estimate of $91 billion. This new projection exceeded the $91.05 billion anticipated by analysts surveyed by LSEG.

In a somewhat paradoxical twist, banks are amassing reserves to cover potential loan defaults, as provisions are returning to more typical levels amid the depletion of consumer savings accrued during the pandemic. Overall, JPMorgan's profit saw a slight decline of 2%, totaling $12.9 billion for the three months ending September 30. However, earnings per share of $4.37 outstripped expectations of $4.01, according to estimates compiled by LSEG.

In regulatory news, the Federal Reserve is tempering its previously contentious proposal after facing substantial pushback from the banking industry. The revised draft rules now suggest a 9% increase in capital requirements for large banks, a significant reduction from the original proposal of 19%.