JP Morgan And Wells Fargo Report Better Than Expected Q3 Results That Reflect Resilient U.S. Consumers

JP Morgan Chase & Co. JPM and Wells Fargo & Company WFC ended the week by reporting their quarterly results, kicking off the third quarter earnings season. Bank of America Corporation BAC is due to report its latest financial results on Tuesday, with The Goldman Sachs Group GS, Citigroup Inc C and Morgan StanleyMS due to also report next week.

JP Morgan Reported A Better-Than-Expected Interest Income 

During the quarter ended in September, JP Morgan reported revenues rose 6% YoY to $43.3 billion, surpassing LSEG’s consensus estimate of $41.63 billion. Results were fueled by investment banking fees that grew 31% as they brought in $2.27 billion.

On the other hand, JP Morgan reported that net income fell 2% to $12.9 billion, but earnings per share rose to $4.37, up from $4.33 as there were fewer outstanding shares in the latest quarter, surpassing FactSet’s consensus estimate of $3.99 a share.

However, net interest income grew 3% to $23.5 billion, surpassing both StreetAccount’s estimate of $22.73 billion and FactSet’s estimate of $22.9 billion. Consequently, JP Morgan raised its full year guidance for net interest income up from $91 billion to about $92.5 billion. 

JP Morgan has et aside more money to cover credit losses, more precisely $3.1 billion, compared ot last year’s comparable quarter when it had only set aside $1.4 billion.

During the earnings call, CFO Jeremy Barnum described the consumer is doing fine and is on a solid footing. But CEO Jamie Dimon spoke of continuously monitoring geopolitical tensions that he described as “treacherous and getting worse.” In a statement where he referred to the unspeakable human suffering, with the outcome of conflicts possibly having far-reaching effects on both short-term economic outcomes and more importantly, the course of history. Dimon is one of the rare CEOs who goes beyond the scope of banking to view the bigger picture of the world, often giving solicited or unsolicited advice to global leaders.

All in all, the biggest American bank continues to thrive in a rising rate environment.

Wells Fargo continues to evolve and generate more income through fees. 

Wells Fargo reported third-quarter revenue dropped to $20.37 billion, reporting a profit of $1.42 per share as net income fell to $5.11 billion. Net interest income also fell 11% to $11.69 billion, but the decline was offset by higher fee income.

However, the bigger picture here is that the once the country’s #1 home mortgage lender has evolved in recent years.

Earlier this year, the Biden administration lifted a consent order that was in place since 2016  following a series of scandals that included fake customer accounts. Last month, Wells Fargo even agreed to work with U.S. bank regulators to improve its financial crimes risk management controls that detect suspicious activity and money laundering. The bottom line is that despite the YoY decline of both profit and revenue, they fell less than analysts had expected. 

By reporting better than feared results, both Wells Fargo and JP Morgan have shown that the U.S. consumers proved to be more resilient than expected, suggesting that a soft landing is more likely than a recession. 

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