Net interest income unexpectedly increased, investment banking business performed well, JPMorgan Chase's Q3 revenue and profit both exceeded expectations | Financial Report Insights

The US bank earnings season has begun, with JPMorgan Chase performing exceptionally well, with revenue and profits exceeding expectations.

JPMorgan Chase's investment banking revenue in Q3 surged by 31% under the loose monetary policy of the Federal Reserve. Net interest income also unexpectedly grew by 3%, driving both profits and revenue to exceed expectations. However, CEO Jamie Dimon has a somewhat dim view of the economic outlook, believing that despite inflation slowing down, the US economy remains resilient but faces challenges such as massive fiscal deficits, infrastructure needs, trade restructuring, and escalating geopolitical risks that could have far-reaching impacts on short-term economic outcomes and historical processes.

On Friday, October 11th, the largest commercial bank in the US, JPMorgan Chase, released its third-quarter earnings report:

• Revenue: $43.32 billion, higher than the expected $41.9 billion;
• Net income: $12.9 billion, a 2% year-on-year decrease but still higher than expected;
• Net interest income: $23.5 billion, a 3% year-on-year increase;
• Non-interest income: $19.8 billion, an 11% year-on-year increase;
• Assets under management (AUM): $3.9 trillion, a 23% year-on-year increase;
• Investment banking revenue: $2.27 billion, a 31% year-on-year increase, surpassing the expected 16%, ranking first in global investment banking revenue;
• Market revenue: Fixed income market revenue of $4.5 billion, flat compared to last year, and equity market revenue of $2.6 billion, a 27% year-on-year increase;

Despite JPMorgan Chase's strong performance in Q3, Dimon's outlook on the economy is somewhat pessimistic. In a statement, he said:

"Despite inflation slowing down and the US economy remaining resilient, there are still some key issues, including massive fiscal deficits, infrastructure needs, trade restructuring, and global remilitarization. The geopolitical situation is very dangerous and getting worse, which could have profound impacts on short-term economic outcomes and historical processes."

Previously, JPMorgan Chase's President Daniel Pinto warned investors that analysts' expectations for the bank's net interest income in 2025 were overly optimistic.

Following the earnings release, JPMorgan Chase's stock price rose in pre-market trading.

Unexpected Growth in Net Interest Income, Strong Performance in Investment Banking Business

Wall Street analysts had originally expected net interest income for major US banks in the third quarter to decline as banks gradually raised deposit rates before the Fed's rate cut in September, squeezing the space for net interest income However, JPMorgan Chase has broken this expectation, with a surprising 3% year-on-year increase in net interest income in Q3, driving both profit and revenue to exceed expectations.

At the same time, JPMorgan Chase's investment banking business has performed impressively - meeting Wall Street's expectations, but also surpassing them.

Analysts generally believe that the investment banking business of major U.S. banks will grow in the third quarter compared to the same period last year, with new stock offerings and bond underwriting expected to be particularly strong.

Over the past two years, the Federal Reserve has aggressively raised interest rates to curb inflation, benefiting ordinary depositors, but also making major companies cautious in making significant decisions such as acquiring small competitors or selling parts of their business - which are core businesses for investment banks. With the Federal Reserve beginning to reverse its monetary policy, investment banking business is expected to see a revival.

JPMorgan Chase's financial report this time confirms this point, with investment banking revenue of $2.27 billion, a significant 31% year-on-year increase, ranking first in global investment banking revenue