JPMorgan profit jumps 35%, but CEO says geopolitics and gov’t inaction have led to ‘dangerous time’

JPMorgan Chase has witnessed a substantial 35% surge in its third-quarter profits compared to the previous year, primarily attributed to the rapid escalation of interest rates. However, the bank’s CEO, Jamie Dimon, has delivered a solemn assessment of the current global state of affairs and economic instability in a statement accompanying the bank’s earnings report.

Dimon’s assessment paints a grim picture, as he characterizes the present moment as possibly “the most dangerous time the world has seen in decades.” He has articulated a litany of significant concerns, including the Russia-Ukraine War, the recent conflict between Israel and the Palestinians in Gaza, soaring levels of government debt and deficits, rampant inflation, and the tightening labor market, marked by worker demands for higher wages that have sparked prominent strikes in the manufacturing and entertainment sectors.

In response to these challenges, Dimon emphasizes the bank’s commitment to preparedness, stating, “While we hope for the best, we prepare (JPMorgan) for a broad range of outcomes so we can consistently deliver for clients no matter the environment.” He underscores the potential for these geopolitical conflicts to disrupt global trade, drawing parallels to the disruption witnessed in Ukraine in early 2022 and the aftermath of the COVID-19 pandemic.

It’s noteworthy that Dimon frequently provides insights into global and economic matters that extend beyond the purview of banking. He is widely regarded as a figure to whom Washington and global leaders turn for counsel, whether solicited or unsolicited. His remarks are likely to resonate throughout the corridors of power in Washington and Corporate America.

Dimon further reveals that he maintains regular communication with major competitors on Wall Street regarding the prevailing geopolitical and economic circumstances. Despite the uncertainties, the bank remains optimistic about both the U.S. consumer and the broader U.S. economy. Jeremy Barnum, the bank’s Chief Financial Officer, notes that JPMorgan has not yet observed any significant financial distress among consumers due to the higher interest rates. However, the bank has noted increased levels of delinquencies and charge-offs in its credit card portfolios.

In terms of financial results, JPMorgan reported a profit of $13.15 billion for the quarter, a notable increase from $9.74 billion in the same period the previous year. On a per-share basis, the profit rose to $4.33 per share from $3.12 per share a year earlier, surpassing analysts’ expectations of $3.95 per share, as reported by FactSet. This strong performance prompted a 3.6% rise in JPMorgan’s shares during late-morning trading on Wall Street.

Crucially, the bank no longer anticipates a recession for the U.S. economy. Instead, it expects the Federal Reserve’s policy of higher interest rates to combat inflation to result in a “soft landing.” This scenario envisions a slowdown in inflation and economic activity, but not a contraction in economic growth.

Furthermore, JPMorgan is presently in the process of integrating First Republic Bank into its operations, following its acquisition earlier in the year during a banking crisis. The bank generated approximately a billion dollars in profit from the First Republic division.

Overall, the bank’s total revenues for the July-September quarter stood at $39.87 billion, a significant increase from $32.7 billion a year ago, largely attributed to higher interest rates. These rates have allowed JPMorgan to charge customers considerably more interest on loans compared to the previous year.

In addition to JPMorgan, two other major Wall Street banks have reported robust results. Wells Fargo & Co. posted third-quarter profits of $5.77 billion, a substantial increase from $3.59 billion in the same period the previous year. Citigroup reported a profit of $3.55 billion, a modest 2% uptick from the prior year. However, Citigroup is undergoing a restructuring process and winding down less profitable segments of its business, which has impacted its profitability in the current quarter.

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More about JPMorgan CEO

• JPMorgan Chase’s Q3 Earnings Report
• Jamie Dimon’s Statement on Current Global Affairs
• Geopolitical and Economic Challenges
• JPMorgan’s Preparedness Strategy
• Jamie Dimon’s Role Beyond Banking
• Outlook on the U.S. Economy and Consumer
• JPMorgan’s Recent Acquisition of First Republic Bank
• Performance of Other Wall Street Banks