JP Morgan boss Jamie Dimon has warned of a broad set of economic risks “under the surface” as the Wall Street bank’s earnings missed expectations in the third quarter.
The US banking giant reported $50.9bn (£38.4bn) in revenue for its latest three month period, up eight per cent year-on-year. But this undershot the $51.2bn forecast by LSEG analysts.
The group’s net interest income reached $15.3bn, growing six per cent from the $14.4bn scored the year prior. Earnings per share also failed to top estimates coming in at $5.57, compared to an expected range of $5.90 to $5.93.
Commercial and investment banking revenue dropped nine per cent quarter-over-quarter to $22.7 billion, snapping a streak of booming dealmaking profits this year.
Wall Street’s top investment banks have benefited from the volatility in markets and big-ticket M&A deals. But the frenzy appears to have simmered in the third quarter with market and securities revenue falling 14 per cent to $11.8bn, compared with the previous quarter.
Dimon said investment banking and markets saw annual growth in the mid-teens but added “activity did moderate somewhat during the quarter”.
Rival Goldman Sachs beat revenue expectations for the period, securing $18.7bn in revenue compared to LSEG estimates of $16.7bn. Total investment banking fees hit $3.2bn, up 21 per cent year-on-year but down five per cent on the previous quarter.
Chris Beauchamp, chief market analyst at IG, said the string of results weren’t “quite the uniformly positive set of figures that investors might have wished for”.
JP Morgan chief lists off economic risks
Dimon renewed his caution around brewing economic risks that he said “continue to shift under the surface”.
He pointed to large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and broader geopolitical conditions.
“These forces may be manageable, but we remain prepared for a wide range of outcomes,” he added.
The Wall Street chief met Chancellor John Healey last month as speculation ramps up that banks could be targeted for a tax raid in the forthcoming Budget.
It followed on from a phone call exchange last month between the pair, where Dimon is understood to have stressed the importance of “getting public policy” right.
The financial services sector have launched a major defensive effort ahead of the Budget as campaigners and left-wing politicians lobby for the industry to face higher taxes.
Dimon has previously cautioned against sector-specific levies. He warned in July that a tax on the sector would have “adverse consequences”. He also said in May the company could pull its £3bn skyscraper investment if the government became “hostile” to banks.