JPMorgan Misses Q3 Profit Estimates as Bond Trading and Dealmaking Cool

JPM missed third-quarter profit estimates on Tuesday. The bank reported net income of $15.3 billion, or $5.57 per diluted share, against an average analyst estimate of $5.85 compiled by LSEG, according to Reuters. Other providers put consensus between $5.90 and $5.94, so the result falls short on every version of the estimate. Excluding $658 million of net investment securities losses in Corporate, worth $0.18 per share, EPS would have been $5.75, still below the $5.90 LSEG consensus cited by CNBC.

Revenue also came in light, though the comparison needs care. JPMorgan reported revenue of $50.2 billion and managed revenue of $50.9 billion, and CNBC measured the managed figure against the $51.22 billion analysts had expected. Setting reported revenue against a managed-basis estimate would overstate the gap, so the like-for-like shortfall is the $50.9 billion managed figure versus roughly $51.2 billion. Expenses rose 12% to $27.3 billion, and credit costs were $2.7 billion, including a $539 million net reserve build.

Trading and dealmaking were the soft spots. Fixed Income Markets revenue was $5.4 billion, down 4%, which TIKR described as its first decline in more than two years. Equity Markets revenue was strong at $5.0 billion, up 49%, lifting total Markets revenue to $10.3 billion, up 15%. Investment banking fees were $3.0 billion, up 14% from a year earlier but down 8% from the second quarter, per Reuters. Net interest income was $27.1 billion, up 13%. CEO Jamie Dimon said trading and investment banking activity "did moderate somewhat during the quarter" and that the bank reduced share repurchases.

The share reaction was mixed. CNBC reported shares down about 3.5% in premarket trading after the release, while Reuters later said the stock had reversed early losses and was up 0.8% premarket. A Motley Fool preview a day earlier flagged that rising bond yields increase banks' funding costs, and Reuters cited a spike in yields as a risk to credit-market activity, but the earnings release does not attribute the miss to yields. Investors may watch whether trading and advisory momentum rebuilds, how quickly buybacks resume, credit costs, and the standardized CET1 ratio of 13.9%.