JPMorgan reports a Q3 earnings beat - as CEO Jamie Dimon sounds the alarm on inflation, rising rates, and other global headwinds

• JPMorgan published third-quarter earnings on Friday that beat Wall Street's forecasts.

• The bank's net revenue grew 10%, but net income slid 17% as it built up its credit reserves.

• CEO Jamie Dimon touted the US economy's strength, but flagged a raft of global headwinds.

JPMorgan Chase reported third-quarter earnings on Friday that beat Wall Street's expectations, pushing its stock up as much as 2% in premarket trading.

Here are the key numbers:

• Revenue: $32.7 billion versus a consensus estimate of $32.09 billion from analysts polled by Refinitiv

• Adjusted net income: $9.74 billion versus a $8.49 billion estimate

• Adjusted EPS: $3.12 versus a $2.88 estimate

The US banking giant posted a 10% year-on-year increase in net revenue to about $33 billion, as sales rose in three of its four main divisions. However, its net income slumped 17% to below $10 billion, as profits fell in three segments.

The income decline largely reflected the bank adding a net $808 million to its credit reserves, after releasing $2.1 billion in the same period last year. Net charge-offs, or presumed bad debts, rose by $203 million to $727 million.

Higher interest rates helped to boosted JPMorgan's net interest income by 34%. However, its non-interest income shrank by 8% due to a 47% plunge in investment-banking fees, nearly $1 billion in investment losses at its corporate bank, and weakness in home lending.

CEO Jamie Dimon championed the US economy in a statement. Yet he also underscored the challenges of rising prices and interest rates, tightening monetary policies, and the impact of Russia's invasion of Ukraine on geopolitical risks and the global energy market.

"In the US, consumers continue to spend with solid balance sheets, job openings are plentiful and businesses remain healthy," he said.

"However, there are significant headwinds immediately in front of us — stubbornly high inflation leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine, which is increasing all geopolitical risks, and the fragile state of oil supply and prices," he added.

Here's a breakdown of how JPMorgan's four key divisions performed:

JPMorgan's consumer-banking division grew its net revenue by 14% to over $14 billion in the period, as higher deposit margins and growth in deposits offset weakness in home lending. Net income was flat at $4.3 billion, as the segment added a net $529 million to its credit reserves.

The key corporate-and-investment bank segment posted a 4% drop in net revenue to $11.8 billion, but net income surged 37% to $3.5 billion. It suffered from a 47% plunge in investment-banking fees, but payments and lending revenue rose sharply. Meanwhile, markets revenue rose 8% as fixed-income trading offset weaker stock trading. The division set aside $513 million for provisional credit losses.

JPMorgan's commercial-banking business posted a 21% increase in net revenue to $3 billion, as higher deposit margins offset lower investment-banking revenue. However, net income plummeted 44% to $946 million as the segment added $618 million to its credit reserves.

Finally, the bank's wealth management division grew net revenue by 6% to $4.5 billion, reflecting deposits and loans on higher margins and balances. Its net income also rose 2% to $1.2 billion, as it released a net $102 million from its credit reserves. Assets under management shrunk 13% to $2.6 trillion, reflecting lower market levels and outflows from liquidity products, partly offset by net inflows into long-term products.

Read more: Goldman Sachs: Make these 25 trades now to profit in what might be a rocky Q3 earnings season

Read the original article on Business Insider