Third-quarter profit of $5.57 a share fell short of forecasts even after excluding a $658 million securities loss. The bank lifted its full-year net interest income forecast to about $106.2 billion and gave a preliminary figure of about $107 billion for 2027 net interest income excluding Markets.
JPMorgan Chase did two things on Tuesday that rarely come together. It missed analysts' earnings forecasts, and it raised its outlook for interest income this year while giving a first, higher figure for next year.
The largest U.S. bank reported third-quarter net income of $15.3 billion, or $5.57 a share, up 10% per share from a year earlier. Analysts surveyed by LSEG had expected $5.90. Revenue on the bank's managed basis rose 8% to $50.91 billion, short of the $51.22 billion analysts had forecast.
How much of the miss was one decision
Part of the shortfall was a choice. JPMorgan booked $658 million of pretax losses on investment-securities sales in its Corporate segment, which cut earnings by $0.18 a share. Mr. Dimon called the losses "discretionary." Excluding them, it earned $5.75 a share.
That accounts for a little more than half of the $0.33 gap with forecasts. The remaining $0.15 came from the operating businesses.
Where the quarter fell short
Trading was split. Markets revenue rose 15% to $10.3 billion, driven by equities, which jumped 49% to $4.95 billion. Fixed income fell 4% to $5.37 billion, below the roughly $6 billion analysts had expected.
Investment banking fees in its corporate and investment bank rose 14% from a year earlier to $3.0 billion but fell 8% from the second quarter. Chairman and Chief Executive Jamie Dimon said markets revenue and banking fees "each rose at a mid-teens rate, helped by strong levels of client activity, although activity did moderate somewhat during the quarter."
Costs grew faster than revenue. Noninterest expense rose 12% to $27.3 billion, against 8% revenue growth, and the managed overhead ratio rose to 54% from 52% a year earlier.
The forecast that moved the other way
The bank now expects full-year net interest income of about $106.2 billion, implying about $28 billion in the fourth quarter. Analysts surveyed by FactSet had expected $105.4 billion for the year. Fourth-quarter guidance compares with $27.1 billion of net interest income in the third quarter, which was up 13% from a year earlier.
JPMorgan also gave a first, preliminary marker for 2027. In a preliminary central case, it expects net interest income excluding Markets of about $107 billion, "driven by the impact of balance sheet growth and higher rates." That would be about 10% above the roughly $97.2 billion it expects for 2026.
It also raised its full-year adjusted expense forecast to about $108.6 billion.
Capital and credit
The bank cut share repurchases. Net buybacks were $664 million in the quarter, alongside $4.4 billion of dividends. "In line with our hierarchy, we reduced share repurchases this quarter. We believe we can deploy this capital over time at very attractive returns for our shareholders," Mr. Dimon said. Its standardized common equity Tier 1 ratio slipped to an estimated 13.9% from 14.2% in the second quarter, as risk-weighted assets grew.
Consumer credit improved. The card charge-off rate fell to 2.91% from 3.34% in the second quarter. The bank added $539 million to reserves, mostly for wholesale loans, including $452 million in its corporate and investment bank.
Mr. Dimon repeated his caution on the economy, saying "large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface."
The early trading
The shares swung before the open. They were down about 3.7%, at around $322, shortly after the release, then recovered. By 7:44 a.m. Eastern they were trading at $337.76, about 1% above Monday's close of $334.30, in thin premarket volume.
Market implications
One reading is that the miss is mostly noise. Half of it came from a securities sale the bank chose to make, consumer credit is improving, and a raised interest-income outlook for this year, plus a higher figure for next, speaks to the earnings power of the core balance sheet in a higher-rate world.
A second reading is that the quality of the quarter weakened. Expenses grew half again as fast as revenue, fixed income fell short, banking activity slowed through the quarter, the expense forecast went up, and the bank is buying back less stock while its capital ratio declines.
What to watch
Management's explanation on the earnings call of the securities sales, the wholesale reserve build and the rate assumptions behind the 2027 figure is the next test. The regular-session reaction will show whether the premarket reversal holds.
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