JPMorgan said fixed-income trading revenue fell 4% from a year ago, marking the first annual decline for that unit in more than two years. A company presentation cited weaker performance across commodities, rates, credit, and public finance, partially balanced by strength in currencies and emerging markets. CFO Jeremy Barnum framed the dip as the "normal course" of ups and downs.
Even so, the firm's trading engine kept humming. Total trading revenue landed at $10.3 billion, a bit shy of forecasts but up 15% from last year. Stock traders delivered a standout performance, with revenue up 49% to $4.95 billion, the best third quarter on record for that business.
Investment-banking fees reached $3 billion, up 14% year over year and roughly in line with expectations. M&A advisory topped estimates, while equity and debt underwriting lagged. Notably, those trading and fee gains were at the low end of what the bank signaled at an industry conference last month.
Net interest income for the quarter came in at $27 billion, topping estimates. JPMorgan says NII for 2024 should come in near $106.2 billion, up from roughly $105.5 billion projected in July, and added that its "central case" for next year is around $107 billion, with its markets business excluded. Analysts had penciled in lower numbers for both.
Quarterly expenses were $27.3 billion, higher than anticipated. The bank now expects adjusted expenses for the full year of roughly $108.6 billion, above the $107.5 billion it guided to in July. The firm also built $539 million of loan-loss reserves, mainly linked to its wholesale portfolio and reflecting net lending activity and changes to how certain exposures are performing from a credit standpoint. For the period, there were $658 million in net investment securities losses, which CEO Jamie Dimon described as "discretionary."
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Shares reversed earlier declines and were up 1.4% at $338.89 as of 9:36 a.m. in New York, bringing the year-to-date increase to 5.1%. JPMorgan opened Tuesday's third-quarter bank reporting season alongside Goldman Sachs, Citigroup and Wells Fargo, with Bank of America and Morgan Stanley set to follow on Wednesday.
Trading desks across Wall Street are contending with elevated rates following the Federal Reserve's September hike to its benchmark rate, and 10-year Treasury yields moved close to heights not seen in nearly 25 years earlier this month. Higher yields knock the price of existing bonds, which can cool trading activity, but they tend to lift interest income.
The mix is clear: equities and deal advice are carrying more weight while parts of fixed income cooled, and guidance for higher NII says the core interest engine still has torque. On the flip side, costs are running hotter and reserves are inching up, with a notable, "discretionary" securities loss in the bag. If you look to big-bank earnings as a barometer, higher rates are redrawing where profits show up, which can ripple into where markets find momentum next.
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