JPMorgan’s Results Breezed Through Any Threat Of Danger

JPMorgan’s Results Breezed Through Any Threat Of Danger
Paul Allison, CFA

about 2 months ago1 min

What’s going on here?

JPMorgan kicked off earnings season on Friday, with results that breezed through any threat of danger.

What does this mean?

JPMorgan isn’t optimistic: the big bank’s CEO declared on Friday that “this is the world’s most dangerous time in decades”. That said, Friday the 13th still proved lucky for some, with JPMorgan reporting danger-defying third-quarter results. More folk and firms wanted loans, and higher interest rates meant they were more lucrative than usual too. That drew net revenue up 15% from the same time last year, and a tight grip on costs meant profit came in above analyst expectations too. And despite the firm’s doomsaying, JPMorgan released some of the cash it had stored up to cover loans, in case hard-up borrowers couldn't repay what they owe. That’s a reassuring sign that the economy and consumers are holding up alright, at least for the time being.

JPMorgan stock
Source: Google Finance

Why should I care?

Zooming out: This isn’t a solo act.

Not to be left out, Citigroup reported a better-than-expected 9% uptick in revenue last quarter versus the same time last year. Most of the bank’s departments held their own, but the banking division – which makes money by lending to companies and netting fees from corporate deals – stood out by bringing the segment's revenue up 17% after a long bout of sleepiness.

Big banks profit

For you personally: Smoke and rearview mirrors.

Bank earnings can indicate the current state of the economy, but they don’t give much away about what to expect next. That’s because the dynamics that decide big banks’ profit switch up really quickly: market volatility, for example, can completely transform a trading division’s results. So while they can make for an interesting read, banks’ books are by no means a magical crystal ball for investors.



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