Big banks open earnings season with mixed results and a rare JPMorgan miss

JPMorgan Chase reported a third-quarter profit of $15.3 billion and missed analysts’ expectations^11,12. Reuters described it as a rare profit miss, with dealmaking and bond trading losing momentum². One account of the results put revenue growth at 8% and the bank’s Basel III common equity Tier 1 capital at approximately $304 billion¹⁰. The shares rose anyway¹¹.

Wells Fargo beat estimates, which it credited to credit quality⁸, and its profit rose on loan growth and higher net interest income⁹. At Goldman Sachs a strong equities performance offset weakness in fixed income, according to the Financial Times¹. The Economist summarised the day as mixed earnings for American banks⁵.

Why it matters to investors

These are the first results since the Federal Reserve resumed raising rates, and the executives presenting them said the consumer has held up. JPMorgan’s chief financial officer said underlying consumer spending trends remain “robust” even as Americans grapple with elevated inflation¹. Citigroup chief executive Jane Fraser said she was not seeing a slowdown⁴. MarketWatch’s summary of the morning was that higher rates have not hurt consumer spending or the financing of artificial intelligence, yet⁴.

Reuters reported that the major banks posted solid third-quarter loan growth but see more competition for deposits, and quoted one of them describing the consumer as “one of the economy’s most important sources of resilience though higher prices continue to weigh on consumer sentiment”³. Wells Fargo’s chief executive struck the same note: economic uncertainty exists and consumer sentiment remains mixed, but the bank’s data shows its consumer and business customers are doing well^8,9.

Jamie Dimon’s own framing was more divided. He said the US economy is solid while warning of risks⁶, and said growth “continued to be fueled by strong business investment and ongoing consumer spending”². Reuters Breakingviews noted that he is as vexed as ever about inflation and rising rates even as his bankers see little stress for average Americans⁷.

What to watch

Goldman Sachs chief executive David Solomon told analysts he was bullish on a “very strong technology supercycle” in AI while staying cautious¹³, which leaves open the question of how much of the banks’ lending growth is tied to that build-out. MarketWatch’s qualifier, that the financing has not been hurt yet, is the one to test in the next set of results⁴.

Markets took the day flatly. Wall Street was subdued in choppy trade after the mixed results, with a flattening yield curve weighing on bank shares; longer-term yields rising faster than shorter-term ones is read as a sign of rising credit risks ahead¹⁴.